Manufacturers added 19,000 net new workers in October, according to the Bureau of Labor Statistics. This was the largest monthly gain since February and an improvement over September’s upwardly revised 4,000 additional employees. August and September jobs data were both revised higher from earlier estimates, each by 2,000 workers. While the October jobs number was definitely better than recent figures, it is still clear that hiring growth for the sector has been disappointingly slow. On a year-over-year basis, manufacturers have added 55,000 additional workers, or 2.4 percent of the 2.3 million nonfarm payroll workers added over the past 12 months.
In October, both durable and nondurable goods firms added workers on net, up 12,000 and 7,000, respectively, from September. Motor vehicles had the largest monthly gain in the manufacturing sector, adding 5,700 additional workers for the month and 47,500 year-over-year. Other sectors with significant gains for the month included food manufacturing (up 3,800), furniture and related products (up 3,400), fabricated metal products (up 3,100), wood products (up 3,100), chemicals (up 2,300), miscellaneous nondurable goods (up 2,300), and electrical equipment and appliances (up 1,500).
In contrast, the following sectors experienced losses in employment for the month: computer and electronic products (up 3,200), primary metals (down 1,600), petroleum and coal products (down 1,100), paper and paper products (down 900), textile product mills (down 500), and machinery (down 300).
Consistent with the net pickup in hiring for the month, the average number of hours worked also edged up marginally. Durable goods employees worked an average of 42.4 hours a week with 4.5 hours of overtime, up from 42.3 hours and 4.4 hours, respectively. Likewise, average weekly hours in the nondurable goods sector in October was 41.2 hours and 4.3 hours, each up 0.1 hours from September. Average weekly earnings were up just barely, however, increasing from $811.18 to $811.60.
Meanwhile, nonfarm payrolls increased by a surprisingly strong 204,000 in October, well above the consensus estimate of around 130,000. Similar to the manufacturing data, the August and September jobs figures were revised higher, adding 107,500 nonfarm payroll workers to the previous two months. The average number of nonfarm payroll workers added each month so far this year has been 186,300, with an average of 201,667 in the past three months (August to October). This indicates that some of the hiring weaknesses mid-year might be beginning to stabilize for the larger economy.
Meanwhile, the unemployment rate rose from 7.2 percent to 7.3 percent, back to where it was in September. This corresponded to a tick up in the participation rate, up from 63.2 percent in September to 63.8 percent in October, suggesting that some workers might be returning to the job market. The number of part-time workers employed for economic reasons also edged higher, up from 7.93 million to 8.05 million.
Overall, employment in October was much better than expected. They reflect the recent pickup in the economy, consistent with yesterday’s also surprisingly strong real GDP figures. As noted above, manufacturers added the most workers in October since February, a sign that the recent acceleration in activity in the sector has spurred some hiring.
Yet, it is also clear that manufacturing job gains continue to be disappointingly slow over the past year, a reflection of the softness in the sector in the spring and summer months. Manufacturers contributed just 2.4 percent of all of the nonfarm payroll workers added over the past 12 months, a far cry from the nearly 9 percent of the workforce that they comprise. And, even in the larger economy, unemployment remains highly elevated, with net job gains still modest at best.
For that reason, policymakers need to consider pro-growth measures that will further spur economic output and build on the job gains experienced last month. Fortunately, manufacturers remain cautiously optimistic about the fourth quarter and 2014 production and sales, and with enough momentum, perhaps the pace of expected hiring might pick up, as well.
Chad Moutray is the chief economist, National Association of Manufacturers.