Today’s strong jobs report shows manufacturers’ record optimism this year is continuing to translate into real job creation. The Bureau of Labor Statistics reported that manufacturers added 24,000 workers in October, improving from a hurricane-related gain of just 6,000 in September. Note that the August and September data were revised upwardly in the latest figures, adding another 10,000 in total to what was estimated previously in those months. Through the first 10 months of 2017, manufacturing employment has risen by 13,800 on average per month—a definite improvement from the loss of 16,000 workers in 2016 as a whole and a sign that firms have stepped up their hiring as a result of a stronger economic outlook and increased demand and production activity. Indeed, since the end of the Great Recession, manufacturing employment has risen by 1,028,000 workers, with 12.48 million employees in the sector in this report.
We have also seen some upward pressure on wages. In this release, average weekly earnings for manufacturing workers rose from $1,090.18 in September to $1,097.57 in October, with that figure up 2.1 percent over the past 12 months. In addition, the average number of hours worked per week in the manufacturing sector edged up from 40.8 to 41.0, with average overtime hours shifting from 3.4 to 3.5 in this release.
In October, durable and nondurable goods employment rose by 19,000 and 5,000 workers, respectively. The largest increases occurred in computer and electronic products (up 4,700), fabricated metal products (up 4,000), chemicals (up 3,600), transportation equipment (up 3,100), wood products (up 2,800), miscellaneous nondurable goods (up 2,700), electrical equipment and appliances (up 2,400) and primary metals (up 1,300), among others. In contrast, employment declined for paper and paper products (down 2,300), machinery (down 1,600) and textile product mills (down 800).
Meanwhile, nonfarm payrolls also rebounded, up from a revised 18,000 in September to 261,000 in October. September’s reading was estimated originally to be a decline of 33,000, and more importantly, revisions in August and September added another 90,000 workers in total to nonfarm payroll employment figures. From January through October, nonfarm payroll employment averaged 168,500 per month. That is a decent pace, even with some easing from the average rate of 186,667 each month for all of last year.
The unemployment rate fell from 4.2 percent to 4.1 percent, its lowest level since December 2000. The so-called “real” unemployment rate also declined, down from 8.3 percent to 7.9 percent, its lowest level since December 2006.
Overall, this was a solid jobs report, illustrating the resilience of employment and the macroeconomy as a whole in spite of recent hurricanes. Additionally, healthy job growth in the manufacturing sector is also attributable to the record optimism we are seeing from manufacturers due to the pro-business tax and regulatory agenda moving forward in Washington. We continue to see a tight labor market, especially for manufacturers, with firms citing challenges in attracting qualified workers. From a monetary policy view, the data should not change the current trajectory of another rate hike in December, with Federal Reserve leaders continuing their path toward normalization in light of a stronger economic outlook. Passing bold, pro-growth tax reform like the legislative package unveiled by leaders in the U.S. House of Representatives yesterday will be key to maintaining this strong outlook.