The Bureau of Labor Statistics said that manufacturers have added 16,000 workers in June, its eleventh straight positive reading for job gains in the sector. Since the end of 2009, the manufacturing industry has added 644,000 net new workers, and the sector has hired 12,636 new individuals on average each month since August. Revisions to April and May data also added another 6,000 employees total in those months.
This is a sign that the increase in demand and production that we have seen since the third quarter of last year has led to additional hiring. Moreover, June’s jobs figure was the highest monthly gain since February, with stronger employment activity for the second consecutive month.
With that said, manufacturing job gains continue to be unevenly distributed, with durable goods firms hiring 17,000 additional workers in June while nondurable goods entities shed 1,000 jobs for the month. The motor vehicle sector experienced the fastest growth in June, adding 5,900 workers in June and 37,200 over the past year. Overall, the largest employment gains for the month were in transportation equipment (up 8,900), machinery (up 3,800), chemicals (up 1,900), primary metals (up 1,900), and computer and electronic products (up 1,700). In contrast, food manufacturing (down 4,800) and miscellaneous durable goods (down 1,000) had the greatest monthly job losses.
In addition to the increase in total hiring, manufacturing employees also earned more money. Average weekly compensation increased from $1,016.40 to $1,020.92. This was 2.3 percent higher than one year ago. Still, the average number of hours worked was unchanged at 41.1, with 3.5 hours of overtime.
Meanwhile, nonfarm payrolls rose by a healthy 288,000 workers in June. So far this year, the U.S. economy has added an average of 230,833 per month, or if you just look at the past five months, the average rises to 248,200. That is significantly more than the 194,250 average experienced in 2013, and it suggests that job growth has begun to pick up. Indeed, the unemployment rate fell to 6.1 percent, its lowest level since August 2008.
This does not mean, however, that we have moved beyond our labor market woes. The participation rate, which remained unchanged at 62.8 percent, continued to be at levels not seen since February 1978. Moreover, those working part-time for economic reasons increased by 275,000 in the month, and it is clear that there remains sufficient “slack” in the labor market, with persistent underemployment.
In conclusion, today’s job numbers provide us with mostly positive news. Job creation in the overall economy and for manufacturers appears to have accelerated, with decent employment growth in June. Yet, it is also abundantly clear that job growth could be more broad-based. The gains in the manufacturing sector were mainly in the durable goods sector, with over half of that figure stemming from transportation. Ideally, we would like to see consistent job growth of at least 15,000 to 20,000 each month with hiring coming from a broader spectrum of the industry.
As we saw in last week’s GDP figures, economic growth has been disappointing in the first half of 2014, with drags from business investment, exports, and government. For that reason, we need pro-growth measures from policymakers that will help to enable even more growth in the months ahead. For example, much of June’s growth came from durable goods sectors, which depend heavily on exports.
With that in mind, manufacturers need Congress to reauthorize the Export-Import Bank, which plays a pivotal role in promoting and supporting U.S. exports for small, medium and large manufacturers. According to estimates, the Ex-Im Bank supports 6,390 jobs per $1 billion of U.S. exports. From 2009 to 2013, the Ex-Im Bank provided $188 billion of U.S. export assistance, which calculates to 1.2 million U.S. jobs supported. Re-authorization of the Ex-Im Bank is an area where policymakers can have a direct positive impact on greater hiring and economic activity right now.
Latest posts by Chad Moutray (see all)
- Richmond Fed: Soft Manufacturing Activity Once Again in October - October 25, 2016
- Markit: Eurozone Manufacturing Activity Accelerated in October to a 2½-Year High - October 24, 2016
- NY Fed: Manufacturing Activity Contracted for the Third Consecutive Month in October - October 17, 2016