New Job Openings and Labor Turnover Survey (JOLTS) data from the Bureau of Labor Statistics show that manufacturing hiring was up in December, mirroring other employment data released by the agency. There were 264,000 job openings in the sector in December, up from 242,000 in November. The increase occurred in both the durable and nondurable goods sectors.

In addition, there were 261,000 hires and 226,000 separations in the month. This suggests net hiring of 35,000, an improvement from the 19,000 gain in November. This can be seen in the attached graphic.

For the macroeconomy as a whole, the number of job openings rose from 3,118,000 in November to 3,376,000 in December – an increase of 258,000. The hiring rate is currently 2.5 percent of the labor market, up from 2.3 percent in November. This brings it back to its level in September, right before the falloff in October in labor market activity. Despite the uptick, the hiring rate was little changed in December from November.

Given that these numbers overlap with strong improvements in U.S. employment in December and January, there is little new news here. The manufacturing jobs picture is improving, and yet, overall, hiring remains a challenge. With modest growth in production this year, we will hopefully see increased hiring in the coming months.

Chad Moutray is Chief Economist, National Association of Manufacturers.

U.S. employment numbers jumped significantly higher in January, according to the Bureau of Labor Statistics, with the unemployment rate dropping to 8.3 percent.  Moreover, nonfarm payrolls grew by 243,000, and manufacturers added 50,000 net new workers. These gains were greater than expected, and certainly, much higher than the estimates from ADP released two days ago. Consensus estimates had been for around 150,000 net new jobs with the unemployment rate remaining around 8.5 percent.

These numbers continue to affirm the rebound and importance of manufacturing to our economic recovery. There were 82,000 net new jobs created in the sector in the past two months. This is definitely a sign that manufacturers have picked up their activity of late. Moreover, manufacturers have added 287,000 of the 2,063,000 net new nonfarm payroll jobs generated in the last 13 months (since December 2010); this suggests that nearly 14 percent of all of the jobs generated in that time frame stemmed from manufacturing.

As I noted last month, though, we would be remiss without mentioning the fact that employment remains a significant challenge, even with today’s good news. The “real” unemployment rate – which includes discouraged and underemployed workers – is now 15.1 percent, down from 15.2 percent in December and 16.1 percent last year at this time.

There are currently 2.81 million Americans who are classified as “marginally attached to the labor force,” with 1.06 million being discouraged workers. This is up slightly from last month. (The civilian labor force also grew last month, from 240.58 million to 242.27 million.)

Looking specifically at the January 2012 figures, the bulk of the new jobs in manufacturing came from the durable goods sector, which was up 44,000 for the month. The largest gains came in fabricated metal products (up 10,900), machinery (up 10,500) and transportation equipment (up 10,300). Nondurable goods sector employment rose by 6,000 in January. In that sector, the strongest growth came in the chemicals (up 2,200), printing and related support services (up 1,700) and beverages and tobacco products (up 1,300) sectors.

The average workweek for manufacturers rose from 40.6 hours in December to 40.0 hours in January. The average amount of overtime edged slightly higher from 3.3 to 3.4 hours. Therefore, the average weekly earnings for manufacturing workers rose from $969.93 to $977.51.

Overall, these numbers show renewed strength in the domestic economy, with employment growth in almost every major industrial sector except information, financial services and government. It mirrors other recent economic indicators showing an uptick in activity since October. Moreover, several sentiment surveys suggest that manufacturers are optimistic about future production and employment in 2012, which should bode well for this year’s numbers.

Yet, it is important to remember that significant headwinds exist both in Europe and in the U.S. The labor and housing markets – while improving – still have a long way to go before they are healthy, and consumer and business optimism is mixed with persistent anxieties. Still, we will take good news when we can get it.

Chad Moutray is chief economist, National Association of Manufacturers.

Yesterday, the Congressional Budget Office (CBO) released its annual Budget and Economic Outlook for fiscal years 2012 to 2022. Its baseline budget for FY 2012 is for a deficit of $1.08 trillion, with smaller deficits thereafter (e.g., deficits of $585 billion in FY 2013, $345 billion in FY 2014, $269 billion in FY 2015…). Much of this assumes that current tax policies expire on December 31 of this year. Total budget deficits under this baseline are $3.07 trillion over the next 10 years.

CBO also provides an alternative fiscal scenario where current tax policies are extended, the alternative minimum tax is indexed to inflation, Medicare payments are held constant at current levels and sequestered cuts as part of the Budget Control Act of 2011 are not put into place. Under this scenario, total budget deficits are estimated to add up to $10.98 trillion between FY 2013 and FY 2022.

In making these assumptions, it is important to keep the underlying economic projections in mind. CBO has forecast real GDP growth of 2.0 percent in 2012 and 1.1 percent in 2013. It then assumes an average growth rate of 4.1 percent for the years of 2014 to 2017. Inflation is expected to be modest, at 1.2 percent in 2012 and below 2 percent in all other years. The unemployment rate is assumed to be mostly unchanged from current levels and is estimated to be 8.9 percent in the fourth quarter of 2012. We do not reach “full employment” for several years, with the forecasted unemployment rate being 5.6 percent by 2017.

Overall, CBO’s baseline analysis paints a picture where economic growth will be modest at best and where the nation’s fiscal budgetary challenges will only become more serious with time. Hard choices will need to be made to address these fiscal imbalances, with budget deficits in each of the next 10 years under both the baseline and alternate scenarios.

It is also clear that these budgetary discussions will need to focus on both discretionary and mandatory spending in the years ahead. Limiting the conversation to discretionary cuts only will not achieve the savings needed to get us ahead. For instance, defense spending is expected to fall from 4.7 percent of the GDP in FY 2011 to 3.0 percent by FY 2022. Likewise, nondefense discretionary will go from 4.3 percent to 3.3 percent over the same time period.

Meanwhile, mandatory spending – while essentially remaining around 13.5 percent of GDP over the next 10 years – will become an ever-increasing share of domestic spending. Entitlement spending (not including interest on the debt) will grow from $2 trillion today to $3.5 trillion in FY 2022, and interest payments more than double from $227 billion to $624 billion over the same time period.

Chad Moutray is chief economist, National Association of Manufacturers

In releasing the latest Industry Survey, the National Association for Business Economics (NABE) noted recent improvements in U.S. growth. In fact, Nayantara Hensel, the chair of the survey committee and a professor at National Defense University, said, “The survey results suggest increased optimism concerning real GDP growth, as well as fewer inflationary or deflationary pressures” (Note: I am a member of this committee and contributed to the report write-up).

Sixty-five percent of business economists responding to this survey felt that real GDP growth would exceed 2 percent in 2012. This reflects a significant upward revision from the prior survey, which was released in October, in which 70 percent predicted growth of between 1 and 2 percent this year.

With that said, several of the indicators were mixed from the past survey. For instance, fewer individuals noted rising sales this time overall. In the goods-producing sector (which includes manufacturing), 40 percent of respondents observed rising sales, and 30 percent stated falling sales. The number of firms reporting profits as unchanged or rising (80 percent) remained mostly the same from the past survey.  On the international front, sales have fallen in recent months, reflecting some weaknesses in foreign operations.

The bulk of goods-producing respondents (67 percent) plan no change in capital spending, but none of them suggest lower spending levels. 

While 30 percent of goods-producing firms observed higher material costs, that figure was lower than the 54 percent who said the same three months ago. This reflects some of the easing that we have observed elsewhere with regard to pricing pressures.

There was less positive news on employment. No respondents in the goods-producing sector reported falling employment in October; in this survey, that figure is 20 percent. The outlook numbers are also poor. Interestingly, this conflicts with many of the other sentiment surveys on manufacturing, which are more upbeat in both of these areas.

Overall, this survey reflects the dynamic nature of the current economy. On the one hand, the larger macroeconomic picture is much-improved, helping to lift optimism among the many business economists who filled out the survey. And yet, many of the company-specific indicators remain weak, including slower growth in the goods-producing industries for sales, employment and capital spending. Reduced inflationary pressures is obviously welcome news, though.

Chad Moutray is chief economist, National Association of Manufacturers.

The employment picture continued to brighten with the release of December’s numbers by the Bureau of Labor Statistics earlier this morning. The unemployment rate fell from a revised 8.7 percent in November to 8.5 percent in December. In addition, nonfarm payrolls increased by 200,000.

This exceeded expectations which had predicted a rise of around 150,000. Manufacturing employment jumped by 23,000 net new workers in December, nearly mirroring the increase found in yesterday’s ADP report.

In 2011, the U.S. economy added 1.64 million new jobs, surpassing the 940,000 net new workers created in 2010. For manufacturers there were 109,000 and 225,000 new employees generated for the sector in 2010 and 2011. The manufacturing sector has added 334,000 new jobs since December 2009.

Employment remains highly elevated, with 8.5 percent unemployment still a major challenge to growth. The so-called “real” unemployment rate – which includes discouraged and underemployed workers –is now 15.2 percent. However, this is an improvement from the 16.6 percent rate observed in December 2010. 

Looking specifically at the December 2011 figures, the net increases in manufacturing employment stemmed entirely from the durable goods sector, as there was no change in nondurables for the month. Manufacturing sectors with the strongest monthly gains were transportation equipment (up 8,600), fabricated metal products (up 6,000) and machinery (up 5,300). The largest declines were found in petroleum and coal products (down 2,300), furniture and related products (down 1,400) and plastics and rubber products (down 1,400).

The average workweek edged slightly higher for manufacturers, from 40.4 hours in November to 40.5 hours in December. The average amount of overtime remained the same at 3.2 hours per week. Therefore, the average weekly earnings for manufacturing workers rose from $961.52 to $969.17.

This employment report is definitely good news and an extremely pleasant way to bring in 2012. The domestic economy – particularly among manufacturers – is starting to rebound after several weak months in mid-2011. More importantly, recent data suggest that manufacturers are upbeat about production and employment moving forward – a positive sign for the coming months.

Yet, we should also appreciate that significant weaknesses persist in the marketplace. The unemployment rate is still stubbornly high, the housing market is improving but still depressed, economic anxieties about Europe still resonate as well as the uncertainty being created in Washington. These concerns suggest that businesses remain cautiously optimistic about 2012, mindful of the headwinds that still persist around them.

Chad Moutray is chief economist, National Association of Manufacturers.

Automatic Data Processing (ADP) reported that total employment in July rose by 114,000, but manufacturing employment fell by 1,000. Given many of the weaknesses seen in recent surveys of manufacturers, the decline in employment should not be a surprise. It also mirrors many of these other indicators, with the employment rebound of June being offset in July.

The bulk of job creation in the month of July stemmed from small and medium-sized businesses, with 58,000 jobs being added by establishments with less than 50 employees and another 47,000 from those with 50 to 499 employees. The goods-producing sector lost 7,000 workers.

These numbers indicate modest growth in employment for the overall economy, but not enough to make a substantial dent in the unemployment rate. For manufacturers, it reflects many of the challenges that these firms have faced since March.

Looking ahead, it will be important for job growth to pick up for the manufacturing sector, particularly if the economy is to improve in the second half. Recent Federal Reserve Bank and other regional surveys have indicated an expectation of higher employment for the next six months, but those growth expectations have diminished somewhat from earlier in the year.

All of this leads us to the official numbers from the Bureau of Labor Statistics, which will be released on Friday. I would expect a similar result in terms of employment growth, both for total non-farm workers and for those in the manufacturing sector, as was seen in the ADP numbers released today.

Chad Moutray is chief economist, National Association of Manufacturers.

The Bureau of Labor Statistics reported earlier today hat the number of manufacturing separations exceeded hirings in May, with 259,000 hires and 268,000 separations, for the first time since last October. The difference between these two figures has narrowed since January, and May numbers correspond to weaknesses in the manufacturing sector. These include supply chain disruptions stemming from the Japanese disaster, rising energy and raw materials prices, and falling consumer confidence.

For the economy as a whole, the hiring and separations rate are roughly equivalent at 3.1 percent of the nonfarm workforce. There were 4,070,000 hires to 4,059,000 separations nationally. While the hiring rate was essentially unchanged, the number of separations rose by 266,000. Higher layoff and quit rates contributed to the increase in separations for the month. This is especially true in the West and Northeast; meanwhile, hiring continues to outpace separations in the South and Midwest.

The number of job openings rose from 2,953,000 in April to 2,974,000 in May, with the rate remaining at 3.0 percent of the workforce in each month. Manufacturers, however, posted 3,000 fewer job openings in May (to 223,000 from 226,000).

Overall, these numbers confirm much of what we already knew about the “cooling” of the manufacturing sector in the months of March, April, and May. Some of the separations among manufacturers were temporary due to extenuating circumstances, and yet, the more recent numbers from June which were released last week have shown this weakness in job creation continuing.

Moving forward, I would expect the number of separations to stabilize and fall once the economy improves. With that said, hiring has been stalled for some time, and it should be a top priority for policymakers to get the job engine churning again.

Chad Moutray is chief economist, National Association of Manufacturers.

This morning, the Bureau of Labor Statistics reported that nonfarm payroll employment rose by just 54,000 in May, its slowest pace in 8 months.  The April nonfarm payroll numbers were also revised down slightly, with a gain of 232,000 (instead of 244,000) new jobs. The unemployment rate in May rose from 9.0 to 9.1 percent. Manufacturing employment dipped by 5,000, and with the accompanying revisions, we can now say that manufacturers have increased employment only by 243,000 since December 2009.

Today’s report clearly indicates that rising raw material and energy prices are taking a toll on the economy, particularly when you look at the sectors which are hardest hit. While overall manufacturing output continues to grow, there are definitely reasons for caution ahead.

Digging deeper into the manufacturing numbers, employment changes in durable goods industries gained 8,000 jobs on net, while nondurables lost 13,000. 

Employment gains in sectors such as fabricated metal products (+6,500), machinery (+5,500), primary metals (+3,100), and furniture and related products (+2,200) were offset by losses in sectors such as transportation equipment (-8,800), food manufacturing (-7,000), printing and related support activities (-4,300), and paper and paper products (-2,500).

Average weekly hours in manufacturing remained relatively stable, going from 40.8 hours in April to 40.9 hours in May, with 3.2 hours of overtime on average in each month. Meanwhile, average weekly earnings also edged higher for manufacturing workers, up from $953.04 in April to $961.41 in May.

Other sectors in the economy were mixed.  Some areas of strength include professional and business services (+44,000), health care (+17,000), transportation and warehousing (+8,000), and mining (+7,000).  There was continued weakness in the following sectors, however: local government (-28,000), retail trade (-8,500), and leisure and hospitality (-6,000).  Most of the other major sectors remained largely unchanged.

An important point to note is that the durable goods sector, with the exception of transportation, did relatively well, which we hope is a good sign moving forward.  However, the uncertainty of the policies coming from Washington continues to weigh heavily on manufacturers.   

Chad Moutray is chief economist, National Association of Manufacturers.

Manufacturers added 25,000 jobs in April, according to a report issued by ADP.  The Labor Department’s employment numbers will be released on Friday, and the ADP numbers are closely examined to gauge where the official figures will be. 

Overall, the economy added 179,000 net new jobs in April, which was below the consensus estimate of 200,000 that many economists had predicted.  The goods-producing sector as a whole added 41,000 new jobs, with 26,000 of those stemming from medium-sized firms with between 50 and 499 employees.  Small goods-producing payrolls with less than 50 employees generated 14,000 new jobs.

For manufacturing, this was the seventh consecutive month of positive gains in employment, mirroring other economic indicators.  But, it also represented a slight fall-off from March, which experienced a net gain of 35,000 new jobs. 

Overall, this report lends further support for continued growth in the manufacturing sector, albeit with some relative cooling off in April.  We would expect a similar trend with Friday’s BLS report.

In February, job growth in the manufacturing industry showed promise by adding 33,000 jobs, but also revealed areas where uncertainty has a dampening effect on job creation. Manufacturers still have a long, long way to go in the economic recovery.    

For the second straight month the vast majority of manufacturing jobs created in February were in the durable goods sector.

Manufacturers are concerned by a number of factors including higher energy prices, misguided federal regulations, and policies that do not support global competitiveness. Policymakers need to join with manufacturers to create an environment that encourages innovation and job creation.

Aric Newhouse is the NAM Senior Vice President for Policy and Government Relations.