ecnomy Archives - Shopfloor

Manufacturing Labor Productivity Gains Slowed in the Third Quarter

By | Economy | No Comments

The Bureau of Labor Statistics reports lower manufacturing labor productivity, down from 2.7 percent growth in the second quarter to 0.4 percent in the third quarter. Output in the manufacturing sector improved (up from 0.1 percent to 1.3 percent), but compensation costs forced unit labor costs higher for the second straight quarter, up 1.3 percent. On a year-over-year basis, however, unit labor costs have been flat, helping to improve global competitiveness.

With that said, the sector’s productivity gains have largely occurred among durable goods firms. Labor productivity was up 1.2 percent in the third quarter for durable goods businesses; whereas, productivity declined by 0.1 percent for nondurable goods entities. Output (up 2.7 percent for durable goods vs. down 0.3 percent for nondurables) and hours worked (up 1.5 percent vs. down 0.2 percent) followed a similar pattern. Unit labor costs were down 0.4 percent in the durable goods sector. In contrast, they were up 3.4 percent for nondurable goods firms.

In general, labor productivity gains have helped to make U.S. manufacturing more attractive as the sector has become more “lean” in recent years. For instance, unit labor costs for manufacturers have fallen 5.0 percent since the second quarter of 2009 (the end of the recession), with unit labor costs for durable goods off an even stronger 11.1 percent over that time frame.

Meanwhile, nonfarm business labor productivity edged slightly higher than before, up 1.9 percent in the third quarter relative to 1.8 percent in the second quarter. Output growth was also stronger (up from 3.3 percent to 3.7 percent). Moreover, unit labor costs declined 0.6 percent, an improvement from the gain of 0.5 percent in the previous quarter. Year-over-year growth in unit labor costs was 1.9 percent, or 3.1 percent since the end of the recession.

The Benefits of Natural Gas

By | Energy | No Comments

In today’s Wall Street Journal former Democratic Senator from Louisiana Bennett Johnston penned an op-ed about his past experience with natural gas regulation while he served in the Senate.

In his piece former Senator Johnston discusses the previous attempts by Congress to regulate and then deregulate natural gas. He concludes that from his own experience it is better to allowing the free market to work. Here is an excerpt from the piece:

The free market might not always lead to everyone’s definition of the sweet spot, but experience has shown that it is a better allocator and regulator than bureaucrats and politicians. We should heed the admonition of Adam Smith that demand begets supply: Allow the free market to allocate the nation’s newfound energy bounty.

The abundance of natural gas is helping manufacturers become more competitive by lowering energy costs. A study by PwC and the NAM concluded that the natural gas revolution can create 1 million manufacturing jobs by 2025.



Manufacturers Welcome Creation of Interagency Task Force on Localization Barriers to Trade

By | Trade | No Comments

In recent years, manufacturers have witnessed a growing and worrisome trend among our trading partners to impose localization measures designed to protect, favor, or stimulate domestic industries and technologies at the expense of imported goods or services. These localization barriers to trade (LBTs) differ in two ways from prior measures favoring domestic goods or services.  

First, they are more complex and sophisticated; for example, some LBTs now require the localization of intellectual property and servers for data storage.  Second, they are more expansive in that major LBTs were at one point associated mostly with China, but now are cropping up in countries all over the world, distorting markets and undermining business opportunities for manufacturers in the United States.

Manufacturers welcome the U.S. government’s work to develop and execute a more robust approach to address these growing market access challenges, including the recent announcement of the new interagency Task Force on Localization Barriers to Trade. A coordinated approach within the U.S. government to combating LBTs with other like-minded governments is vital to push back effectively on these anti-competitive practices, including using multilateral venues like the World Trade Organization (WTO) and the Asia-Pacific Economic Cooperation (APEC) forum, as well as through the Trans-Pacific Partnership and investment treaty negotiations.  Read More