All Posts By

Chad Moutray

jolts

Net Hiring in Manufacturing Turned Negative Again in October

By | Economy, Shopfloor Economics | No Comments

The Bureau of Labor Statistics said that net hiring in the manufacturing sector turned negative again in October, ending four straight monthly gains. According to the latest Job Openings and Labor Turnover Survey (JOLTS), total hiring declined from 279,000 in September to 271,000 in October. Hiring was lower for both durable (down from 163,000 to 156,000) and nondurable (down from 116,000 to 115,000) firms for the month. At the same time, total separations – which include quits, layoffs and retirements – were also reduced in October, down from 278,000 to 273,000. Overall, net hiring (or hiring minus separations) decreased from 1,000 in September to -2,000 in October, the first net decline since May.

Meanwhile, manufacturing job openings also pulled back in October, even as they remain relatively elevated in general. Job openings in the sector edged down from 328,000 to 322,000 in this report, with postings shifting lower since achieving an all-time high of 397,000 observed in April. Through the first ten months of 2016, job openings have averaged 346,000 per month, up from 311,000 for 2015 as a whole. As such, we have continued to see relatively healthy gains in manufacturing job openings, despite some easing in over the past few months. This gives us optimism for faster hiring growth moving forward. In the October data, nondurable goods firms had more openings, up from 122,000 to 132,000, but there were fewer postings among durable goods manufacturers, down from 206,000 to 190,000. Read More

Factory Orders Grew at Fastest Monthly Pace in October in 16 Months

By | Economy, Shopfloor Economics | No Comments

The Census Bureau said that new factory orders rose 2.7 percent in October, the fourth straight monthly gain and its fastest pace of monthly growth since June 2015. Yet, the jump in October came largely from a big boost in aircraft sales, with transportation equipment orders up 12.0 percent. Excluding transportation, new orders for manufactured goods increased 0.8 percent. Over the longer term, new factory orders have started to stabilize on a year-over-year basis, up 1.3 percent since October 2015 but improving from a negative year-over-year position in August. Nonetheless, new orders for manufacturing goods excluding transportation have risen just 0.5 percent over the past 12 months. This suggests still-soft demand in the broader manufacturing sector, even as this was the first positive year-over-year reading since October 2014. Read More

productivity

Manufacturing Productivity Rebounded Less Than Originally Estimated in the Third Quarter

By | Economy, Shopfloor Economics | No Comments

The Bureau of Labor Statistics said that manufacturing labor productivity rebounded less than originally estimated in the third quarter. After falling by 0.5 percent in the second quarter, output per worker in the sector increased 0.4 percent in the third quarter. It was estimated to grow by 1.0 percent in preliminary figures. The downgrade stemmed largely from slower output growth, down from 1.1 percent in the prior assessment to a 0.6 percent increase in the latest data. On the other hand, hours worked improved (although still not robustly), up from 0.1 percent growth in the original numbers to 0.3 percent. Unit labor costs rose by 3.3 percent in the third quarter.

Durable goods manufacturers fared better than their nondurable goods counterparts, with labor productivity up 3.0 percent in the former but down 3.0 percent in the latter. Along those lines, durable goods manufacturing output increased 2.7 percent in the third quarter, with output from nondurable goods firms off by 1.9 percent. Unit labor costs increased 1.2 percent and 6.0 percent for durable and nondurable goods manufacturers, respectively. Read More

trade-deficit

U.S. Trade Deficit Rebounded in October

By | Economy, Shopfloor Economics | No Comments

The Bureau of Economic Analysis and the Census Bureau said that the U.S. trade deficit rebounded in October after falling to a 19-month low in September. The trade deficit rose from $36.17 billion in September to $42.60 billion in October. It has been highly volatile this year (ranging from $36.17 billion in September to $45.26 billion in February), but the year-to-date average of $40.90 billion in 2016 is somewhat lower than the $41.70 billion average seen for 2015 as a whole. The October increase in the headline number stemmed from reduced goods exports (down from $126.63 billion to $123.11 billion) that corresponded with higher goods imports (up from $183.72 billion to $186.52 billion). The goods imports pace was the largest in 13 months. Read More

employment

November Jobs Report Shows Challenges Remain for Manufacturers

By | General, Shopfloor Economics, Shopfloor Main | No Comments

We have seen a steady stream of good economic numbers in the past few weeks, including today’s jobs numbers. First and foremost, the unemployment rate fell to 4.6 percent, its lowest level since August 2007. At the same time, nonfarm payrolls rose by 178,000, which was on par with the consensus estimate of around 180,000. Overall, this mirrors healthier figures for consumer spending and improved business sentiment in recent data, and these reports show that the U.S. economy has strengthened. This should help cement a Federal Reserve rate hike at their upcoming meeting on December 13-14.

Despite these positives, manufacturers have continued to struggle, as evidenced by the loss of 4,000 workers in November, with 60,000 fewer workers on net year-to-date. It was the fourth straight monthly decline for employment in the sector. Moving forward, manufacturing leaders are cautiously optimistic about demand and production for 2017, and we would expect that this increase in activity would lead to additional hiring.

With that said, it’s clear the incoming administration, which has touted manufacturing as a top priority, has its work cut out for it.  Manufacturers look forward to working with the next Administration and Congress to enact policies – from infrastructure, to comprehensive tax reform – that will help spur America’s manufacturing economy.  To this end, as an extension of the NAM’s Competing to Win policy platform, the NAM will be releasing individual policy white papers in the coming weeks.  Each white paper will focus on a specific policy priority that manufacturers urge the incoming presidential administration and Congress to focus on and will be send to the respective transition teams.

There are also things the current Congress/administration can do to help grow jobs including take action to restore the Ex-Im Bank to full functionality.  As long as Ex-Im cannot fully operate, manufacturers in the U.S. will continue to lose manufacturing jobs to our foreign competitors.

construction

Manufacturing Construction Activity Remained Cautious in October

By | Economy, Shopfloor Economics | No Comments

The Census Bureau said that private manufacturing construction spending remained cautious in October, pulling back for the second straight month. The value of construction put in place in the sector declined from $75.19 billion in September to $73.37 billion in October, down 2.4 percent for the month. While manufacturing construction has trended higher in the past two or three years, largely from increased investment in the chemical sector, activity has stalled more recently as the sector has grappled with sluggish growth and economic and political anxieties. Along those lines, construction activity in the manufacturing sector has pulled sharply lower since achieving the all-time high of $82.15 billion in September 2015. Read More

ism

ISM: Manufacturing Production in November Expanded at Fastest Clip since July 2015

By | Economy, Shopfloor Economics, Shopfloor Main | No Comments

The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers’ Index (PMI) rebounded once again in November, growing at a five-month high. The composite index rose from 51.9 in October to 53.2 in November, expanding for the third straight month. This is encouraging for a sector that has seen subpar growth over much of the past two years on global headwinds and economic anxieties. Indeed, manufacturing production (up from 54.6 to 56.0) in November expanded at its fastest clip since July 2015, with new orders (up from 52.1 to 53.0) also accelerating slightly. Exports (down from 52.5 to 52.0) and employment (down from 52.9 to 52.3) slowed a little for the month but remained positive, with hiring expanding for only the third time this year so far.

Overall, manufacturers appear to be more upbeat in their assessments of the economy and about demand. The sample comments tend to echo this. One computer and electronic products leader reported, “Strong manufacturing numbers in anticipation of strong year-end bookings.” Other comments also mirrored that positive trend, describing activity as “steady” or “consistent” or “good.” Read More

personal-income

Personal Income Grew at Fastest Pace in 6 Months in October

By | Economy, Shopfloor Economics | No Comments

The Bureau of Economic Analysis said that personal incomes rose 0.6 percent in October, its fastest monthly pace of growth since April. On a year-over-year basis, personal incomes have increased 3.9 percent, a 9-month high and definite progress from the 3.4 percent pace seen in August. At the same time, total manufacturing wages and salaries increased from $834.4 billion in September to $840.6 billion in October. Overall, manufacturing wages and salaries have trended in the right direction, up from the $780.0 billion and $806.7 billion averages of 2014 and 2015, respectively.

Meanwhile, personal spending increased 0.3 percent in October, rising for the second straight month but slowing from the 0.7 percent gain observed in September. Durable and nondurable goods purchases rose 1.0 percent and 1.4 percent, respectively, for the month. This included decent growth in spending for food and beverages purchased for the home, motor vehicles and parts and recreational goods and vehicles. In general, Americans have been more willing to open their pocketbooks in recent months relative to a more-cautious approach seen earlier in the year. Along those lines, personal consumption expenditures grew 4.2 percent year-over-year in October, up from 2.9 percent in March and its quickest pace since January 2015. Read More

ADP: Private Sector Employment Rebounded in November, but Manufacturing Continued to Lag

By | Economy, Shopfloor Economics | No Comments

ADP said that manufacturing employment growth remained weak in November, with hiring in the sector down in nine of the 11 months so far this year. In November, there were 10,000 fewer workers on net for manufacturers, which continue to be challenged by global headwinds and economic anxieties. Overall, employment in the sector is down by 46,000 year-to-date, according to ADP. This suggests that manufacturers remain wary about adding to their workforce, particularly with sluggish growth in demand and production. Yet, job openings and sentiment surveys have been more favorable of late, which could indicate better hiring growth moving forward when manufacturers become less cautious. Read More

Conference Board: Consumer Confidence Rose to Its Highest Level since July 2007

By | Economy, Shopfloor Economics | No Comments

Consumer confidence soared in November to its highest level since July 2007, according to the Conference Board, bouncing back from a pre-election lull in the October report. The Consumer Confidence Index jumped from 100.8 in October to 107.1 in November. This mirrored a similar post-election rise in sentiment seen in the competing survey from the University of Michigan and Thomson Reuters. More importantly, it represented a significant improvement in Americans’ assessments of the economy since May’s dismal 92.4 reading. The underlying data noted progress in the public’s perceptions about both current (up from 123.1 to 130.1) and future (up from 86.0 to 91.7) conditions. The measure for the present economic environment was also its loftiest level since July 2007, with the expectations index reaching a 17-year high. As noted in the press release, this report should serve as good news for retailers – and by extension, manufacturers – for the holidays. Read More