Here are the files for this week’s Monday Economic Report:

While we have seen some modest improvements in manufacturing activity so far in 2013, these gains have not yet translated into significant increases in hiring. Employment numbers for March were disappointing overall, with only 88,000 nonfarm payroll workers added on net. This was well below the expected increase of 200,000 employees and suggests that the U.S. economy still shows signs of uncertainty. Higher payroll taxes and across-the-board federal spending cuts have eaten away at retail sales and slowed employment growth in some key sectors.

Manufacturers lost 3,000 workers on net in March. As we have seen for much of the past year, hiring in the sector continues to be soft. Over the past 12 months, manufacturing has contributed just 4 percent of the net new jobs in the economy. This is a reversal of the outsized role from the two years before that and something that can be reversed with pro-growth policies like those laid out in the NAM’s Growth Agenda and changed perceptions about the economic and political landscape. In the short term, however, the Society for Human Resource Management’s (SHRM) survey of hiring intentions in April suggests that the net percentage of new hiring among manufacturers decelerated over the course of the past month and since this time last year. This contrasts with service sector employment growth, which has picked up of late.

The Purchasing Managers’ Index (PMI) from the Institute for Supply Management (ISM) was also discouraging last week. Manufacturers responding to the survey suggested a slower pace of growth for new orders in March, dampening enthusiasm with a lower-than-expected PMI reading. The ISM PMI fell from 54.2 in February to 51.3 in March. In contrast, two other releases out last week were more encouraging. Factory orders rose a healthy 3.0 percent in February largely on strong demand for aircraft, and construction spending among manufacturers was higher, continuing a steady upward trend and reversing the slight pullback in the second half of last year. However, ideally, both of these gains could be more broad-based, as these gains are highly mixed across the sectors.

One piece of good news in the ISM report was new export orders were rising. With so many manufacturers exploring growth through trade, the higher export numbers were encouraging. The Bureau of Economic Analysis and the Census Bureau reported that the U.S. trade deficit narrowed in February, with goods exports up to their second-highest level ever. The bulk of that increase stemmed from a narrowing of the petroleum trade balance, with petroleum imports down and exports higher for the month. Outside of petroleum, manufactured goods exports have grown very slowly in the first two months of 2013, up just 2.5 percent. To make the President’s goal of doubling exports by 2015, this pace will need to pick up significantly. In January and February, total exports to Europe and Japan were down, but exports to our three largest trading partners (Canada, Mexico and China) were higher.

This week is a quieter one on the economic front. The retail sales and consumer confidence figures due out on Friday will be closely watched for clues regarding how the payroll tax increase and sequestration might have impacted spending and overall sentiment. Likewise, the National Federation of Independent Business (NFIB) and the Manufacturers Alliance for Productivity and Innovation (MAPI) will discuss how small businesses and manufacturers are faring in their latest surveys. Data on business and consumer sentiment were largely mixed in March. Aside from those indicators, the other highlights include new data on job openings and producer prices.

Chad Moutray is the chief economist, National Association of Manufacturers.

The Society for Human Resource Management (SHRM) reported that the pace of hiring in the service sector has picked up, but for manufacturers, it appears to be slowing. The monthly Leading Indicators of National Employment (LINE) report from SHRM says that 50.3 percent of manufacturers plan to increase their hiring in April, which is the exact same rate as one year ago. At the same time, there are 12.5 percent of manufacturers planning to decrease employment, up from 7.0 percent last year. As a result, the net percentage of new hiring in the manufacturing sector dropped from 43.3 in April 2012 to 37.8 today, or 5.5 percentage points lower.

In addition, this represents a deceleration of hiring from last month’s report, as well. In the March survey, there were 58.0 percent of manufacturers who said that they planned to increase hiring, compared to 8.9 percent planning to decrease. Therefore, the net hiring rate for March was 49.1 percent, suggesting that the pace of net hiring has slowed over the course of the past month (and not just the past year) in the manufacturing sector.

With that said, it appears to be getting easier to recruit new manufacturing workers. In March 2012, 18.3 percent of respondents said that it was more difficult to recruit, with just 1.1 percent feeling that it was easier for a net percentage of 17.2 percent. In this latest survey, the net percentage had dropped to 8.4 percent, with 7.7 percent suggesting that recruiting had become less difficult. Still, 16.1 percent continue to see hiring as a challenge. (continue reading…)

Here is the summary from this week’s Monday Economic Report:

The U.S. economy appears to be stabilizing, with several reports showing stronger-than-expected increases in activity, including the latest jobs numbers release on March 8. Nonfarm payrolls rose by 236,000 in February, well above the consensus estimate of around 155,000, and the unemployment rate dropped to 7.7 percent. Manufacturers hired an additional 14,000 workers for the month, which was in-line with the average monthly gain over the course of the past year. However, losses in several sectors offset some of the gains in manufacturing employment. Ideally, we could see stronger job growth, even as these numbers represent a good start. We need to see broad-based manufacturing hiring growth, with the sector creating an average of 20,000 jobs each month. This is consistent with the “20/20 vision” outlined by National Association of Manufacturers (NAM) President and CEO Jay Timmons in his Detroit Economic Club keynote speech last month.

The Federal Reserve Board’s Beige Book noted the “modest to moderate” pace of growth in the economy since its last report, citing strengths in housing and consumer spending in particular. Growth in manufacturing activity was more mixed, as we have seen in recent sentiment surveys from various regional Federal Reserve Banks. In addition to weaknesses in sales and production, respondents mentioned federal budget cutbacks, the regulatory environment and “the unknown effects of the Affordable Care Act” as roadblocks to their competitiveness. This suggests a degree of skittishness in hiring, which might be reducing the overall job growth numbers mentioned above. Nonetheless, the larger Beige Book findings suggest an economic environment that is improving, with wage and pricing pressures under control, at least for now. (continue reading…)

The U.S. economy added 157,000 nonfarm payroll jobs in January, according to the Bureau of Labor Statistics (BLS). This was in-line with the consensus estimate for the month. However, the unemployment rate edged higher from 7.8 percent in December to 7.9 percent in January. BLS included a number of revisions for 2012 to reflect payroll counts and seasonal adjustments. Including these revisions, nonfarm payrolls rose 2.2 million in 2012, or roughly 180,000 per month.

The report clearly illustrates the slow growth in the manufacturing sector since the beginning of 2012. Last month’s estimate of 25,000 workers added in December has now been revised down to just 8,000. In January, the sector added 4,000 net new workers. This reflects the weaknesses that we saw over the second half of the year and manufacturers have lost 7,000 workers since July overall.

In January durable goods industries added 3,000 additional employees on net and nondurables contributed 1,000 jobs. The largest gains were seen among motor vehicle and parts (up 2,500), petroleum and coal products (up 1,500), chemicals (up 1,400), computer and peripheral equipment (up 1,200), and fabricated metal products (up 1,000). These were counteracted by declines in nonmetallic minerals and products (down 1,900), electrical equipment and appliances (down 1,700), machinery (down 1,300), and miscellaneous nondurables (down 1,300), among others.

Average weekly earnings in the manufacturing sector dipped from $980.06 to $976.84 which is consistent with weaker activity. The average number of hours in the workweek also edged slightly lower, from 41.7 to 41.6, with the average overtime hours staying the same at 4.2 hours. (continue reading…)

Nonfarm payroll gains were larger than expected in October, according to the Bureau of Labor Statistics. They were by 171,000 workers instead of the 125,000 increase anticipated by most economists. It was also an improvement from the 148,000 nonfarm payrolls employees added in September, which was revised from its earlier 114,000 estimate.

At the same time, the unemployment rate rose from 7.8 percent to 7.9 percent. The higher figure – despite improvements in nonfarm payroll numbers – stems from a slight uptick in the participation rate from 63.6 to 63.8. Also, as noted in last month’s release, a large increase in part-time employment was a major factor in the decline in the unemployment rate from 8.1 to 7.8 percent in September. This appears to have modulated somewhat, with part-time workers who are doing so for economic reasons down from 8.6 million to 8.3 million.

Manufacturing employment also improved, with 13,000 net new workers in October. But it is hard to ignore the loss of 13,000 and 14,000 jobs in August and September. Note that the last two month’s data have been revised, as the previous estimates were for 38,000 workers lost in the manufacturing sector. Manufacturers have added 158,000 workers year-to-date or exactly 500,000 since the end of 2009.

Looking at specific sectors, nondurable goods industries fared better than durables, up 8,000 versus 5,000 workers added in the month. Sectors with the strongest gains include food manufacturing (up 2,700), chemicals (up 1,600), computer and electronic products (up 1,600), plastics and rubber products (up 1,600), beverages and tobacco products (up 1,500), nonmetallic mineral products (up 1,400), and transportation equipment (up 1,400). (continue reading…)

Automated Data Processing (ADP) reported that total nonfarm payrolls rose 162,000 in September, below the 189,000 workers added in August. This suggests modest growth in employment last month, and the figure was slightly above expectations, which were around 140,000. The bulk of the net new jobs came from the service sector, which added 144,000 employees on net.

Manufacturers hired just 4,000 more workers on net in September, making it the sixth consecutive month in a row of lackluster job growth for the sector. This corresponds with weaker global growth and rising anxieties about the future of the U.S. market. For the goods-producing sector as a whole (which would add construction, mining, and utilities), there was a net gain of 18,000 employees.

As with past reports, small and medium-sized establishments accounted for most of the net job gains, or 89.5 percent of them in September. In fact, large goods producers added just 1,000 workers for the month.

The ADP numbers are often looked at for clues regarding the official government employment statistics, which will be released on Friday morning. Last month, the Bureau of Labor Statistics reported disappointing jobs numbers, with 96,000 nonfarm payroll jobs added and manufacturers shedding 15,000 workers. While these figures were below the estimates provided by ADP, it did suggest inadequate job gains since the spring, which was similar. (continue reading…)

The Bureau of Labor Statistics reported that regional and state employment numbers did not change much in June. Given that this corresponds to this corresponded with disappointing national job creation numbers (e.g., up just 80,000), this should not be surprising.

The highest unemployment rates in the country continue to be in Nevada (11.6 percent), Rhode Island (10.9 percent), and California (10.7 percent). North Dakota’s 2.9 percent unemployment rate makes it the lowest, with Nebraska (3.8 percent) and South Dakota (4.3 percent) following closely behind.

States with the fastest growth in manufacturing employment in June include Ohio (up 4,700), Tennessee (up 2,900), Indiana (up 2,800), Washington (up 2,400), and Illinois (up 2,400). At the other end of the spectrum, the largest losses occurred in California (down 4,400), Texas (down 3,400), Florida (down 3,000), New York (down 3,000), and New Jersey (down 2,400).

Taking a longer view, Michigan still leads the pack with the most manufacturing job gains since the end of the 2007-2009 recession. Since December 2009, it has added 64,000 net new workers. It was followed by Ohio (up 49,200), Indiana (up 48,400), Texas (up 45,700), and Illinois (up 42,900).

Chad Moutray is chief economist, National Association of Manufacturers.

Today’s Labor Department jobs report showed employment rose 120,000 in March over February, considerably less than analysts had been expecting, and about half the average gain of the previous three months. 

Manufacturing employment, however, was a bright spot in the figures. Outperforming the economy as a whole, the March manufacturing jobs gain accounted for nearly one-third of the entire private sector increase. 

Manufacturing employment rose 37,000 in March, the second-strongest gain in the last 12 months, and continuing the manufacturing jobs gain that began in January 2010.  Since that time, manufacturing has gained 470,000 jobs – and has seen employment grow 10 percent faster than in the rest of the private sector.

Durable goods employment continued its strong growth pattern, gaining 26 thousand jobs in March.  Reflecting resurgent motor vehicle production in the United States, the March employment gain in that sector accounted for nearly half of the entire durable goods employment increase.  Non-durable goods employment rose 11,000.

The strong growth in manufacturing that has been going on since January 2010 is clearly visible in the attached graphs, as is the robust performance of the durable goods sector and the lackluster record in non-durables employment. (continue reading…)

The Bureau of Labor Statistics (BLS) observed a higher number of job openings in January in the manufacturing sector, according to new Job Openings and Labor Turnover (JOLTS) data. Manufacturers posted 285,000 new jobs in January, up from 252,000 in December. The bulk of this increase occurred in durable goods industries, with nondurable goods manufacturers’ also upping their job postings slightly.

This is obviously a positive sign of future hiring intentions, but it contrasts somewhat with actual hiring activity in January. Both net hiring and net separations figures dropped in the month. The number of manufacturing hires fell from 269,000 in December to 246,000 in January. December’s figure appears to indicate a rush of hiring before the end of the year, which was not sustained in January. Likewise, separations for the industry dropped from 239,000 to 213,000. These numbers suggest net hiring of 33,000 in January.

Looking at the larger economy, job openings, hirings and separations were all lower in January than December. Growth in manufacturing job openings was one of the bright spots. There were 3,459,000 job openings in January, compared to 3,540,000 in December. Still, the longer-term job openings trend is a positive one, as there were 2,860,000 job openings overall in January 2011. This can also be seen in the attached graphic for the manufacturing sector.

Likewise, the overall job market has improved at the state level, as well. BLS also released state and regional employment information for January showing mostly lower unemployment rates and higher levels of nonfarm employment. The lowest unemployment rate in the U.S. is still in North Dakota at 3.2 percent, with Nevada having the highest at 12.7 percent. The largest monthly improvements in the unemployment rate were found in Mississippi (now 9.9 percent) and Missouri (now 7.5 percent), with each down 0.5 percentage points since December.

Looking at the manufacturing sector, the largest monthly gain occurred in Michigan, up 16,300 workers in January. This reflects recent gains in the motor vehicle sales. On a year-over-year basis, Michigan has added 31,800 manufacturing jobs since January 2011, the most of any state. Other states with large increases in manufacturing employment in the past year include Texas (up 25,900), Ohio (up 17,700), Indiana (up 16,900), Washington (up 16,400), Iowa (up 11,800), South Carolina (up 11,200) and Illinois (up 10,500). These gains speak largely to growth in durable goods production in many of these regions.

Chad Moutray is chief economist, National Association of Manufacturers.

With consumers and businesses more confident, the U.S. economy continues to expand modestly. An improved – but still weaker-than-desired – jobs picture is part of that. The U.S. added 227,000 net new jobs in February, or 1.2 million in the past six months. Manufacturing has played a significant role in the recent rebound and since the end of the recession. In fact, over the past three months, manufacturers have added 111,000 new workers as overall activity has picked up. The manufacturing sector has contributed over 13 percent of all net new jobs created in the nonfarm economy since December 2010.

To be fair, the recent job gains in manufacturing have not been as broad-based as we might prefer. They have stemmed primarily from durable goods producing industries, with nondurables continuing to lag. This trend has been fairly consistent over the past two years, yet it would be nice to see greater employment gains across-the-board. Of course, this also mirrors industrial production data, with stronger growth tending to concentrate among the motor vehicle, aerospace, fabricated metals, machinery and primary metals sectors.

One of the larger threats to growth is a slower global economy. Mario Draghi, the European Central Bank president, announced a lower forecast for real GDP growth, with output slightly contracting for the continent as a whole this year. Meanwhile, other economies are also slowing. China, for instance, just cut its growth target to 7.5 percent. This slower growth shows up in the international trade figures released on Friday. Goods exports dropped in most regions of the world, including those to China and Europe. Increased imports of petroleum were another factor, with the overall trade deficit widening for the third consecutive month.

This week, we will gain further insights into the strength of the current rebound. New industrial production figures will be released on Friday, following regional survey data from New York and Philadelphia. The Federal Reserve Board will also announce on Tuesday whether or not it intends to pursue any new monetary policies. As always, the Fed will be mindful of inflation, and later in the week, the Bureau of Labor Statistics will issue updates on both consumer and producer prices. In addition to those releases, other highlights for the week include updates on consumer and small business sentiment, job market turnover and retail sales.  

Chad Moutray is chief economist, National Association of Manufacturers.