Manufacturing employment dropped by 1,000 in March, its first monthly decline in eight months. While this was disappointing, the good news was that manufacturers added 15,000 workers more than previously estimated in January and February, according to the latest Bureau of Labor Statistics revisions. Since August, the manufacturing sector has averaged 12,125 additional workers each month, a sign that the rebound that we have seen since the beginning of the third quarter has resulted in a pickup in hiring. Since the end of 2009, manufacturers have added 602,000 employees, or 7.3 percent of the 8.2 million workers created during that time.
Still, the fact that manufacturers shed 1,000 workers in February was surprising, particularly given consensus estimates that were closer to the ADP estimates released on Wednesday. In March, durable goods firms added 8,000 employees on net, with nondurable goods entities losing 9,000 workers. Miscellaneous durable goods (up 3,000), machinery (up 2,500), nonmetallic mineral products (up 2,100), and transportation equipment (up 1,800) were examples of sectors with increased hiring for the month. Perhaps notably, motor vehicle employment was unchanged.
Yet, these gains were more than offset by declines in hiring for food manufacturing (down 4,600), plastics and rubber products (down 3,700), fabricated metal products (down 2,600), and apparel (down 700), among others.
On the positive side, the average number of hours worked and compensation both increased – a sign that the sector has begun to rebound in terms of overall activity. Average weekly earnings in the manufacturing sector rose from $1,008.17 in February to $1,016.40 in March. At the same time, the typical manufacturing employee worked 41.1 hours, with 3.5 hours of overtime on average. This was up from 40.8 regular hours and 3.4 overtime hours the month before.
In the larger economy, nonfarm payroll growth was in-line with consensus estimates, up 192,000 in March. This was down from a revised 197,000 in February. Moreover, it was close to the average of 190,385 workers added each month in 2013. In general, this suggests that the U.S. economy has rebounded from the falloff in hiring activity seen starting in December, when nonfarm payroll growth was just 84,000. Winter weather has been a factor, but it appears that we have started to move beyond it.
The unemployment rate was unchanged at 6.7 percent. The labor force participation rate edged slightly higher, up from 63.0 percent in both January and February to 63.2 percent in March. Meanwhile, the number of workers employed part-time for economic reasons also rose somewhat, up from 7.2 million to 7.4 million.
In conclusion, manufacturing employment declined unexpectedly in March. Given the recent rebound in new orders and production seen in other economic indicators, the consensus had been for modest gains last month. Still, revisions to January and February were comforting, and the longer-term trend continues to support the lift in manufacturing activity and hiring seen since August. Over the past eight months, the sector has added 12,125 workers on average each month, a nice turnaround from the weaknesses seen last spring.
At the same time, these numbers indicate that there is more work to do for stronger economic growth in the coming months. Manufacturers remain mostly upbeat about demand, output, and employment gains for 2014, but uncertainties continue to persist. As a result, manufacturers want policymakers to adopt pro-growth measures that will help to ensure that their optimistic assessments can come to fruition.
Chad Moutray is the chief economist, National Association of Manufacturers.
Latest posts by Chad Moutray (see all)
- Record-High Perceptions about the Current Economy Lifts Consumer Confidence to Best Reading since 2004 - March 16, 2018
- JOLTS: 427,000 Manufacturing Job Openings in January, with Nonfarm Postings at a New All-Time High - March 16, 2018
- Manufacturing Production Rebounded in February, up 1.2%, with 2.5% Growth YOY, the Best Since July 2014 - March 16, 2018