Manufacturing employment gains have been softer the past three months, with weather likely having a dampening effect. The Bureau of Labor Statistics said that manufacturers added 6,000 net new workers in February, continuing a trend of weaker hiring seen since December. This data has been consistent with other economic releases of late that have shown more sluggish demand, production, and shipments due mainly to winter weather-related slowdown.
On the positive side, this was the seventh consecutive monthly expansion for manufacturing employment, with the sector rebounding starting in August after sluggishness in the spring and early summer of 2013. Over the course of the past seven months (August to February), manufacturers have added nearly 12,000 additional workers on average each month, which stands in contrast to the net declines of roughly 6,250 per month on the four months prior to that (April to July). Since the end of the recession, the manufacturing sector has added 588,000 more workers, with 100,000 of those coming in the past 14 months.
Looking specifically at the February manufacturing data, durable goods employment rose by 6,000, with nondurable goods hiring unchanged on net. The largest gains were in the following sectors: transportation equipment (up 3,700, of which 3,400 stemmed from motor vehicles and parts), miscellaneous nondurable goods (up 1,800), machinery (up 1,600), plastics and rubber products (up 1,400), primary metals (up 1,300), textile mills (up 1,100), and miscellaneous durable goods (up 1,000).
At the same time, food manufacturing (down 1,900), nonmetallic mineral products (down 1,900), computer and electronic products (down 1,000), apparel (down 900), and paper and paper products (down 700) were among the sector with the greatest job losses for the month.
Overall compensation edged slightly higher for the sector, which was a good sign. Average weekly earnings in the manufacturing sector rose from $1,003.26 in January to $1,006.10 in February. This was 1.9 percent more than observed 12 months ago, as earnings continue to move upward modestly. With that said, the average number of hours worked in February was unchanged at 40.7 hours, with average overtime down from 3.4 hours to 3.3 hours.
In the larger economy, nonfarm payroll growth was somewhat higher than anticipated, up 175,000 in February. The consensus expectation has been for around 150,000. This was the second consecutive increase in jobs growth, but these figures also show that hiring has been below average over the past three months, which have averaged just 129,333 per month. This was below the average of 194,250 seen in 2013 as a whole.
As noted above with manufacturing, weather has been a factor. The silver lining with weather-related influences, of course, is that warmer temperatures should bring improved job growth, and these data appear to support that view. Other industries with positive job growth include professional and business services (up 79,000), education and health care (up 33,000), leisure and hospitality (up 25,000), construction (up 15,000), and government (up 13,000, primarily at the state and local level).
The unemployment rate rose from 6.6 percent in January to 6.7 percent in February, with a slight increase in the size of the labor force. Still, the participation rate remained unchanged at 63.0, keeping it at levels not seen since the late 1970s.
In conclusion, manufacturers have continued adding to the size of their workforce, with positive jobs growth in each of the past seven months. Yet, hiring has remained soft over the past three months, with weather likely lowering overall activity in the sector. The manufacturing sector came out of 2013 with strong momentum in terms of output and demand, and most manufacturers remain cautiously optimistic in their outlook for 2014. With that in mind, I continue to feel that manufacturing employment should improve in the coming months.
At the same time, the fact that we have seen softness recently shows just how fragile the economic rebound has been, even with strength seen since the third quarter of last year. 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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