The Bureau of Labor Statistics said that manufacturing labor productivity jumped 4.9 percent in the third quarter, up from 2.1 percent in the second quarter. It was the fastest quarterly increase in four years, and mostly reflected a modest increase in output (up 2.7 percent) combined with a decline in the number of hours worked (down 2.1 percent). Despite the significant increase in output per hour for all persons working, the decrease in hours worked resulted in a 5.9 percent jump in hourly compensation, and therefore, unit labor costs rose 0.9 percent. In general, we want unit labor costs to fall, as the improvements in efficiency help to make manufacturers more competitive globally. (continue reading…)
Tag: durable goods
The Census Bureau said that new factory orders rose 1.8 percent in June, rebounding from declines in both April and May. Indeed, manufacturers’ new orders have decreased in 9 of the past 11 months, with a number of economic headwinds dampening overall demand. On a year-over-year basis, new orders have declined from $510.1 billion in June 2014 to $478.5 billion in this release, or a decrease of 6.2 percent. In June, the gain stemmed largely from strong aircraft sales growth, with transportation equipment sales up 9.3 percent following declines of 4.0 percent and 6.3 percent in April and May, respectively. Aircraft orders can be volatile from month to month, with sales often batched together around large trade shows, and this latest report reflects numbers from the Paris Air Show. If you were to exclude transportation, new factory orders would have risen by a more modest 0.5 percent. (continue reading…)
Manufacturing production was unchanged in April, slowing from the 0.3 percent gain experienced in March. Overall, output in the sector has been very soft for five straight months. Manufacturers have struggled with a number of significant headwinds in the U.S. and global economies, including challenges in growing exports, residual impacts from the West Coast ports slowdown, regional weather challenges and an anxious consumer. As a result, the year-over-year pace has slowed from 4.5 percent in November to 2.3 percent in April. Similarly, capacity utilization in manufacturing has dropped from 79.8 percent five months ago to 78.2 percent today.
Durable goods production increased 0.1 percent in April, with output for nondurable goods firms off 0.1 percent. There were strong increases for manufacturing production for nonmetallic mineral products (up 1.4 percent), electrical equipment and appliances (up 1.3 percent), motor vehicles and parts (up 1.3 percent) and wood products (up 1.3 percent). However, these were offset by declining output in the machinery (down 0.9 percent), aerospace and miscellaneous transportation equipment (down 0.6 percent), and food, beverage and tobacco products (down 0.6 percent) sectors, among others. (continue reading…)
The Census Bureau said that new durable goods orders declined 1.4 percent in February, falling for the fifth time in the past seven months. Much of the decrease in February stemmed from reductions in the demand for transportation equipment, with new orders in that sector down 3.5 percent in February. This included a reduction in sales for motor vehicles and parts (down 0.5 percent for the month) and fewer nondefense and defense aircraft orders (down 8.9 percent and 33.1 percent, respectively). Note that aircraft orders can be quite volatile from month to month, as nondefense aircraft orders had increased 122.2 percent in January. Therefore, we often look at this data by stripping out the transportation equipment sector, and when you do so, durable goods orders decreased by 0.4 percent – still a soft figure. This mirrors other data showing a number of headwinds dampening demand and output in the early months of 2015. (continue reading…)
The Bureau of Labor Statistics said that manufacturers added 22,000 net new workers in January, extending the 26,000 gain observed in December. These data included rather large upward revisions for previous months, and since December 2013, manufacturers have added roughly 18,800 workers per month on average. As such, the manufacturing sector has been making relatively strong gains on the hiring front, with an average of 29,000 over the past four months (October through January). This suggests that momentum in demand and production at the end of 2014 has warranted healthy growth in employment, which is encouraging. Looking at a longer time horizon, manufacturers have added 855,000 workers since 2009. (continue reading…)
The Bureau of Labor Statistics said that productivity in the manufacturing sector increased 1.3 percent in the fourth quarter, its slowest pace of 2014. For the year as a whole, labor productivity in the sector rose 2.5 percent, up from 1.0 percent in 2012 and 2.0 percent in 2013. The increase in annual labor productivity in 2014 stemmed from better output data, which grew by 3.9 percent for the year. Indeed, output was stronger in the fourth quarter, as well, up 5.7 percent versus 4.8 percent in the third quarter. In the fourth quarter, unit labor costs edged slightly higher, up 0.2 percent, on higher real compensation costs. (continue reading…)
The Census Bureau said that new factory orders fell 3.4 percent in December, extending the 1.7 percent decrease observed in November. It was the fifth straight monthly decline. This disappointing report was foreshadowed by the preliminary durable goods release, which stated that sales had declined in four of the past five months. As such, these data show that manufacturing activity ended 2014 on a weak note, with sluggish global growth dampening demand in the United States. To illustrate the slowness of recent data, manufactured goods orders averaged $498.81 billion per month in 2014 as a whole, but December’s level was just $471.45 billion. On a more encouraging note, the average for new factory orders in 2014 was 2.8 percent higher than the $485.4 billion monthly average seen in 2013. (continue reading…)
The Census Bureau said that new durable goods orders rose 0.4 percent in October, increasing for the first time since July. Yet, the October figure was buoyed by higher transportation order sales, which grew 3.4 percent for the month. Orders of motor vehicles and parts were up 0.3 percent for the month and 6.1 percent year-to-date, suggesting that that segment of the manufacturing sector remains quite healthy. Defense aircraft sales were also up sharply in October. (continue reading…)
The Bureau of Labor Statistics said that productivity in the manufacturing sector rose 3.2 percent in the third quarter. Manufacturing labor productivity has exceeded 3 percent in each of the three quarters so far in 2014, which represents a nice bump-up from the 1.0 percent and 2.0 percent annual increases seen in 2012 and 2013, respectively.
Despite these solid figures, output measures for the sector have been more volatile, up just 1.6 percent in the soft first quarter and then rebounding with a 7.1 percent increase in the second quarter. In these latest third quarter numbers, manufacturing output rose a solid 4.1 percent, helping to push unit labor costs down 0.7 percent. Lower unit labor costs help to make the sector more competitive globally. Indeed, unit labor costs for the manufacturing sector have fallen 5.4 percent since the end of the Great Recession, with even steeper declines in the manufacturing sector. (continue reading…)
The Census Bureau said that new factory orders jumped 10.5 percent in July. With that said, much of that increase stemmed from nondefense aircraft orders (up from $16.8 billion in June to $70.3 billion in July), as noted in the previous release of preliminary durable goods sales figures. Commercial airplane orders are choppy, with sales usually announced in batches. Motor vehicle sales were also stronger in July, up 7.3 percent.
Excluding transportation, new factory orders declined 0.8 percent, suggesting softness in the broader market. Durable goods orders excluding transportation fell 0.7 percent, with nondurable goods sales off 0.9 percent. Despite the decline in July, demand has largely been higher since January’s winter-related decreases, and new manufacturing orders excluding transportation have risen 2.7 percent over the past six months. As such, hopefully, the July numbers are just a pause in an otherwise positive trend year-to-date.
Looking specifically at new durable goods orders in July, the data were mostly lower. This included electrical equipment and appliances (down 4.8 percent), computers and electronic products (down 1.7 percent), furniture and related products (down 1.2 percent), machinery (down 1.2 percent) and primary metals (down 0.3 percent). Outside of transportation, the only other major sector with higher sales in July was fabricated metal products, up 0.1 percent.
Meanwhile, shipments of manufactured goods increased 1.2 percent, rising for the second straight month. Since January, shipments have increased 3.7 percent, illustrating the rebound seen over the past six months after weaknesses earlier in the year. Durable goods shipments rose 3.5 percent (or 1.5 percent excluding transportation); whereas, nondurable goods shipments fell 0.9 percent.
The largest increases were in transportation equipment (up 8.1 percent), machinery (up 3.0 percent), computers and electronic products (up 2.4 percent), nonmetallic mineral products (up 1.6 percent), textile mills (up 1.6 percent) and primary metals (up 1.4 percent). In contrast, shipments of petroleum and coal products (down 3.2 percent), textile products (down 2.1 percent) and chemical products (down 1.0 percent) declined in July.
Chad Moutray is the chief economist, National Association of Manufacturers.