Manufacturing Employment Rose in April after Following Sharp Declines in February and March

The current state of the manufacturing economy continues to be a give-and-take between signs that the sector is beginning to improve versus ongoing challenges related to global headwinds. The latest job numbers represent both of those views. On the one hand, manufacturers added 4,000 workers in April, a positive gain following two months of declines which was led by strength in the motor vehicle segment. Yet, hiring remained soft overall, with 23,000 fewer workers on net through the first four months of 2016. Indeed, manufacturing leaders remain cautious in their outlook, and as such, we continue to see weaker-than-desired job growth. Hopefully, that will improve moving forward, particularly if the manufacturing economy truly is beginning to stabilize.

Looking more closely at the April manufacturing job data, durable goods manufacturers added 6,000 workers on net, with nondurable goods employment down by 2,000. Sectors with the largest monthly gains were motor vehicles and parts (up 6,100), food manufacturing (up 1,700), miscellaneous nondurable goods manufacturing (up 1,400), fabricated metal products (up 1,300) and electrical equipment and appliances (up 800). In contrast, plastics and rubber products (down 1,600), machinery (down 1,200), primary metals (down 1,100) and nonmetallic mineral products (down 800) were among the sectors experiencing declining employment for the month. In all, 12 of the 19 major manufacturing sectors had reduced employment in April.

Despite the soft hiring figures, average weekly earnings increased in the manufacturing sector, up from $1,046.80 in March to $1,054.13 in April. This represented a 3.0 percent increase from the $1,023.20 average seen in April 2015. At the same time, average weekly hours and overtime hours were both unchanged at 40.7 hours and 3.3 hours, respectively, in April.

In the larger economy, nonfarm payrolls increased by 160,000 in April, pulling back from a revised 208,000 in March. Year-to-date, nonfarm payroll growth has averaged 192,250, a decent figure but down from 205,250 seen over the same four-month time frame at the beginning of last year. The gains in April stemmed largely from the service sector, including education and health care, financial activities, leisure and hospitality, professional and business services and transportation and warehousing.

The unemployment rate was unchanged at 5.0 percent. Meanwhile, the participation rate declined once again, down from 63.0 percent in March to 62.8 percent in April. The so-called “real” unemployment rate – which includes discouraged workers, the underemployed and those working part-time for economic reasons – edged down from 9.8 percent to 9.7 percent, matching the level seen in February and its lowest rate in eight years. It peaked at 17.1 percent in March and April 2010 at its worst point after the Great Recession.

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

Leave a Reply