Manufacturers Lost 17,000 Workers in August

By September 4, 2015General

The Bureau of Labor Statistics said that manufacturers lost 17,000 workers on net in August. It was the first decline in employment in the sector since July 2013, or just over two years ago. As such, it suggests that challenges in the manufacturing sector continue to hold down hiring rates, with headwinds such as the strong dollar and economic problems in key export markets dampening overall demand. Through the first eight months of 2015, hiring has averaged 3,500 per month for manufacturers – well below the more robust average of 20,667 per month seen in the second half of 2014. Financial concerns in the global equity markets, driven in particular by worries about growth in China, have likely not helped matters recently, and could partly explain the lower manufacturing hiring rates for August. There could also be some seasonal factors, given that it was August, a traditionally slower month.

Employment for durable and nondurable goods firms was both lower in August, down 5,000 and 12,000, respectively. Some of the larger declines included fabricated metal products (down 6,900), food manufacturing (down 6,500), machinery (down 4,300), plastics and rubber products (down 2,800), primary metals (down 2,100) and computer and electronic products (down 1,800). In contrast, the motor vehicles and parts sector added 5,700 workers for the month, with gains also reported for miscellaneous durable goods (up 3,700), nonmetallic mineral products (up 1,300), wood products (up 1,000) and paper and paper products (up 700).

On the positive side, compensation moved higher, with average weekly earnings up from $1,029.79 in July to $1,033.46 in August. This represents a 1.5 percent gain year-over-year. Average weekly hours were unchanged at 40.8 hours, with average overtime hours edging slightly lower, down from 3.4 hours to 3.3 hours.

For manufacturers, the jobs numbers continue to disappoint, much as they have for all of this year so far. The strong U.S. dollar, lower crude oil prices and significant economic fluctuations continue to challenge manufacturers. Policymakers can also help by enacting pro-growth policies that help to enhance our global competitiveness and open new markets. This means passing tax reform and drafting smarter regulations, but it also necessitates passage of new trade agreements and reauthorizing the Export-Import Bank.

Looking at the larger economy, nonfarm payrolls increased by 173,000 workers in August, slowing from the 245,000 employees added in July. While this figure was lower than expected, the June and July data were both revised higher, adding 44,000 workers in total to those two months. Nonfarm payrolls have risen by 212,000 per month on average year-to-date, down from 280,833 per month in the second half of last year. As such, the U.S. economy has seen decent employment growth this year overall, even if the August figure was somewhat soft. Along those lines, the unemployment rate fell from 5.3 percent in July to 5.1 percent in August, its lowest level since April 2008. The participation rate was unchanged at 62.6 percent.

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

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM), where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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