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Chad Moutray

Manufacturing Production Declined in December

By | Economy, Shopfloor Economics | No Comments

Manufacturing production fell 0.1 percent in December, ending the year on a soft note. Output grew just 0.8 percent in 2015, highlighting the challenges faced in the sector by the global slowdown and reduced commodity prices. Manufacturers anticipate a continuation of many of these headwinds in 2016 as global growth remains quite volatile.

As manufacturers continue to confront headwinds in the economy, there are policy measures Washington can take to help get the economy–and manufacturers–growing faster and producing more.  Among those policy measures are comprehensive tax reform, robust regulatory reform and the ability to trade with new markets.


Manufacturing Job Openings Dipped to their Lowest Level in 13 Months in November

By | Economy, Shopfloor Economics | No Comments

The Bureau of Labor Statistics said that manufacturing job openings fell to their lowest level in 13 months in November. The Job Openings and Labor Turnover Survey (JOLTS) reported that job postings in the sector declined from a revised 310,000 in October to 294,000 in November, the first time this measure has been below 300,000 since October 2014. As such, it represents a pullback in the pace of job openings since the indicator reached an eight-year high in July with 339,000 postings. Digging a little deeper, job openings for nondurable goods firms decreased from 127,000 to 111,000; whereas, postings from durable goods manufacturers was unchanged for the month. Both durable and nondurable goods activity remained soft, however, easing from stronger growth in the summer.

Meanwhile, net hiring in the manufacturing sector was flat in November. Manufacturers hired 274,000 workers in November, up from 265,000 in October, with durable and nondurable goods businesses seeing increases. At the same time, manufacturing job separations – which include quits, layoffs and retirements – rose from 267,000 to 274,000. As such, net hiring (or hires minus separations) was zero in November, up from a decline of 2,000 in October. Hopefully, we will see a rebound in net employment growth in the coming months.

In the larger economy, nonfarm job openings accelerated from 5,349,000 in October to 5,431,000 in November. Postings have slowed since reaching an all-time high of 5,668,000 in July, but have trended higher over the past year, up from 4,886,000 in November 2014. There were increased job openings in the following sectors in November: construction, education and health services, government, leisure and hospitality and professional and business services. Beyond job openings, net hiring in the overall economy was unchanged at 267,000.


Manufacturing Job Growth: December Stronger After Weak Year

By | Economy, General, Shopfloor Economics | No Comments

While Manufacturers had a more positive month than expected, adding 8,000 jobs in December, 2015 will go down one of the softest years for employment growth in the sector since the Great Recession. All in, manufacturers added 30,000 workers on net in 2015, well below the 215,000 workers hired in 2014.

Nondurable goods employment increased by 14,000 workers in December, but total hiring in the manufacturing sector was pulled lower by a reduction of 6,000 employees from durable goods firms. The strongest gains in December were seen in the food manufacturing (up 3,500), miscellaneous durable goods (up 3,500), plastics and rubber products (up 3,300), chemicals (up 2,500) and furniture and related products (up 2,100) sectors. In contrast, machinery (down 6,300), transportation equipment (down 3,300, including a loss of 2,400 for motor vehicles and parts), primary metals (down 2,800) and fabricated metal products (down 1,500) each experienced significant declines for the month. Read More

Factory Orders Fell 0.2 Percent in November

By | Economy, Shopfloor Economics | No Comments

The Census Bureau said that new factory orders declined by 0.2 percent in November, falling for the third time in the past four months. As such, this report was somewhat disappointing, particularly following the 1.3 percent increase observed in October. New manufactured goods orders decreased from $473.1 billion in October to $472.2 billion in November. On a year-over-year basis, new orders have declined by 4.2 percent, down from $493.0 billion in November 2014. This speaks to the multitude of headwinds hitting the manufacturing sector lately, ranging from currency challenges to reduced commodity prices to sluggish economic growth worldwide.

With durable goods sales unchanged for the month, as noted in preliminary data released earlier, orders for nondurable goods were off 0.4 percent in November. With that said, durable goods orders would have been weaker if transportation equipment data were excluded, mainly because of a large decline in nondefense aircraft demand. These numbers can be quite volatile from month-to-month, where sales are often batched together around key events, such as air shows. Excluding transportation, new factory orders were down 0.3 percent. This speaks to broader weaknesses beyond transportation – something that can be better seen in the year-over-year figures. New factory orders excluding transportation have decreased from $416.8 billion in November 2014 to $390.4 billion in this release, off 6.3 percent.
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U.S. Trade Deficit Narrowed Somewhat in November on Reduced Goods Imports, Exports

By | Economy, Shopfloor Economics | No Comments

The Bureau of Economic Analysis and the Census Bureau said that the U.S. trade deficit narrowed somewhat, down from $44.58 billion in October to $42.37 billion in November. These data points mirror averages from the past two years. For instance, the year-to-date average for 2015 was $44.37 billion, which was up from the overall 2014 average of $42.36 billion. The reduced trade deficit in this latest report stemmed mostly from reduced goods imports (down from $187.18 billion to $183.48 billion), with goods exports also slightly lower (down from $123.61 billion to $122.19 billion). Meanwhile, the service sector trade surplus edged down marginally from $18.99 billion to $18.91 billion.

At least part of the decline in goods exports could be explained by a reduction in petroleum exports (down from $7.53 billion to $7.26 billion) to its lowest level since December 2010. As a result, the petroleum trade deficit increased from $4.48 billion to $5.36 billion. Still, the petroleum trade deficit has declined significantly over the course of the past year on reduced energy prices. The monthly average has decreased from $15.81 billion for all of 2014 to $6.92 billion through the first 11 months of 2015.
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ADP: Manufacturers Experienced Slight Increases in Hiring in November and December

By | Economy, General, Shopfloor Economics | No Comments

ADP said that manufacturers added 2,000 workers on net in November, extending the 4,000 increase observed in December. That followed declines in five of the seven months prior to that, highlighting the softness of employment growth in the sector for the year as a whole. Indeed, hiring was essentially flat in 2015, easing sharply after adding 1.35 million workers in 2014. A strong dollar, weaknesses in the energy sector and sluggish export growth have combined to challenge manufacturers in the United States, with demand, production and hiring growth all dampened. Hopefully, we will begin to see a rebound in activity in 2016; although, expectations remain muted with lingering headwinds.
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Manufacturing Construction Pulled Back in November, Remained Strong Year-Over-Year

By | Economy, General, Shopfloor Economics | No Comments

The Census Bureau said that private manufacturing spending fell 4.0 percent in November. The value of private construction put in place in the manufacturing sector declined from $87.04 billion at the annual rate in October to $83.59 billion in November. There has been a bit of volatility from month-to-month in this figure since reaching an all-time high in May of $89.65 billion. Nonetheless, the larger story has been an extremely positive one, with year-over-year growth of 28.8 percent, up from $64.91 billion in November 2014. Indeed, the current reading on manufacturing construction activity closely matches the 2015 year-to-date average of $83.46 billion, up from an average of $57.03 billion for all of 2014. Much of the recent growth in manufacturing construction has stemmed from investments made in the chemical sector, which continues to benefit from cost advantages in the energy sector. Read More


ISM: Manufacturing Activity Remained Negative in December for the Second Straight Month

By | Economy, General, Shopfloor Economics | No Comments

The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers’ Index (PMI) remained negative for the second straight month. The composite index fell from 48.6 in November to 48.2 in December, its lowest level since June 2009. As such, manufacturers reported soft demand and production activity at the end of 2015, which represented a sharp contrast to the modest growth seen 12 months prior to that. Indeed, the ISM Manufacturing PMI was 55.1 one year ago, and it peaked last year at 58.1 in August 2014. The sector has struggled with sluggish growth abroad and lower commodity prices over much of the past year, dampening overall manufacturing activity. Along those lines, new orders (up from 48.9 to 49.2) and production (up from 49.2 to 49.8) continued to indicate weaknesses in the sector, even as each recorded some easing in the pace of decline in December. To be fair, however, the sample comments also noted some segments that were doing well at year’s end, particularly those aligned with the automotive sector. Read More

personal spending

Personal Spending Rebounded Somewhat in November, but Remained Softer-Than-Desired Overall

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

The Bureau of Economic Analysis said that personal spending increased 0.3 percent in November, rebounding from being unchanged in October. Indeed, spending on durable and nondurable goods items were both higher for the month, up 1.1 percent and 0.9 percent, respectively, which was encouraging. However, overall spending remained softer than desired, with a general sense that Americans are holding back in terms of their overall consumer purchases. The increases in goods spending in November followed two months of softness, and service-sector spending was unchanged for the second straight month. Moreover, personal consumption expenditures have risen 2.9 percent over the past 12 months. While this represents modest growth in personal spending year-over-year, this pace has decelerated over the course of this year. For instance, the year-over-year rate was 4.4 percent one year ago.
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durable goods

New Durable Goods Orders Unchanged in November

By | Economy, Shopfloor Economics | No Comments

The Census Bureau said that new durable goods orders were unchanged in November. With that said, the report also suggested broader weakness in durable goods demand outside of defense aircraft, which jumped 46.9 percent for the month, up from $5.6 billion in October to $8.2 billion in November. Indeed, new orders excluding transportation equipment edged down 0.1 percent in November, with core capital goods spending (or nondefense capital goods excluding aircraft) down 0.4 percent. Overall, this report continues a trend of soft growth for the sector, with global challenges and reduced commodity prices dampening demand and production. Since November 2014, new durable goods orders have risen 1.2 percent, but excluding transportation equipment, year-over-year sales were down 1.9 percent.
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