Manufacturers continued to expand their workforce in January, hiring an additional 21,000 employees on net to begin 2014. The Bureau of Labor Statistics have noted an uptick in jobs in the manufacturing sector over the past six months, with an average of 15,500 net new workers added each month from August to January. This contrasts with an average decline of 4,400 in the five months prior to that (March to July). This suggests that the increase in manufacturing demand and production that we have seen in other indicators have led to a pickup in hiring of late. This has definitely been good news for the sector.

Manufacturers have added 598,000 workers since December 2009. This was 7.7 percent of 7.8 million net new nonfarm payroll workers added during that time frame.

Looking specifically at the January data, durable and nondurable goods firms generated 15,000 and 6,000 jobs, respectively, on net. The largest gains were in the following sectors: machinery (up 7,000), transportation equipment (up 5,700, of which 4,700 stemmed from motor vehicles and parts), wood products (up 4,600), food products (up 2,800), and plastics and rubber products (up 2,800). Electrical equipment and appliances (down 2,400), computer and electronic products (down 2,300), primary metals (down 2,200), and textile mills (down 1,900) were some of the sectors with declining employment for the month.

Despite the decent hiring figures for the manufacturing sector in January, the number of hours worked and average compensation edged slightly lower. This could have been due to poor weather, which recent surveys have suggested dampened output slightly last month. The average number of hours worked for manufacturers dropped from 40.9 in December to 40.7 in January, with the overtime average declining from 3.5 hours to 3.4 hours. Likewise, average weekly earnings for manufacturers decreased from $1,005.73 to $1,002.85.

In the larger economy, nonfarm payroll growth was disappointing for the second straight month, with just 75,000 and 113,000 jobs created on net in December and January, respectively. The consensus expectation had been for roughly 175,000 nonfarm payroll workers added in the month. Average job creation in 2013 was 193,500 per month, further highlighting the weaknesses seen in the past two months. Colder weather might have negatively impacted this data, as noted above.

The unemployment rate dropped from 6.7 percent in December to 6.6 percent in January. This was the lowest level since October 2008. The participation rate – another factor influencing the unemployment rate lately – actually increased for the month, up from 62.8 percent to 63.0 percent. Nonetheless, it still remains at lows not seen since the late 1970s.

In conclusion, the manufacturing sector began the new year with strong momentum from the second half of last year. Manufacturers have noted a pickup in demand and production over the past six months, which have led to increase in hiring overall. In general, manufacturers have reflected cautious optimism for 2014, and the 15,000 additional workers added each month since July highlights much of this positivity.

With that said, business leaders continue to have some anxieties about the economy, and we have seen cold weather and sluggishness in export growth dampen output and sales over the past two months. The data for the larger macroeconomy tend to highlight some of these worries, with very disappointing job growth overall. To ensure that the optimism for this year can be fulfilled, manufacturers want policymakers to adopt pro-growth measures that will allow them to continue to expand.

Chad Moutray is the chief economist, National Association of Manufacturers.

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