Tag: hiring

ADP: Manufacturers Added 3,000 Workers in July

Automatic Data Processing (ADP) said that manufacturers continued to add workers in July, but at a slower pace than the month before. The manufacturing sector created 3,000 net new workers in July, down from 10,000 in June. In the ADP’s analysis, the sector has hired an average of 6,000 additional workers each month since January. Note that this is lower than the roughly 9,000-worker average seen in the official year-to-date government data from the Bureau of Labor Statistics (BLS).

In the larger economy, nonfarm private businesses added 218,000 employees on net in July. This was down from 281,000 in June, but it was also the fourth straight month with employment growth exceeding 200,000. The year-to-date average is 204,000, an improvement from the 187,000 average seen for all of 2013.

In July, the largest job gains were seen in the professional and business services (up 61,000); trade, transportation and utilities (up 52,000); construction (up 12,000); and financial activities (up 9,000). Small and medium-sized businesses (e.g., those with less than 500 employees) contributed nearly 81 percent of the net new jobs.

On Friday, we will new employment figures from BLS, and I would expect roughly 225,000 nonfarm payroll workers and around additional 10,000 manufacturing workers.

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

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Manufacturers in Texas Note Accelerated Activity in July

The Federal Reserve Bank of Dallas said that manufacturing activity accelerated in July, continuing to rebound from softer levels earlier in the year. The composite index of general business activity rose from 11.4 in June to 12.7 in July. It was the 14th consecutive month of expanding levels of activity; however, manufacturers reported a near-stagnant pace in February. In July, the underlying data were mostly higher across-the-board, including the pace of growth for new orders (up from 6.5 to 13.0), production (up from 15.5 to 19.1), shipments (up from 10.3 to 22.8), capacity utilization (up from 9.2 to 18.0) and capital expenditures (up from 12.7 to 13.3).

With that said, employment growth (down from 13.1 to 11.4) eased slightly, one of the few areas that decelerated in the month. Still, hiring has generally improved from where it was two months ago, with the index up from 2.9 in May. Moreover, one-quarter of respondents to the Dallas Fed survey said that they had added workers in July, with just 13.6 percent suggesting that employment was declining for their company. In addition, the average number of hours worked (up from 4.7 to 6.3) increased somewhat.

Along those lines, a fabricated metal manufacturer noted difficulties in attracting and retaining workers in the sample comments. They wrote, “Skilled employee turnover is getting out of control. There are too many employers chasing too few skilled workers.” Other commenters spoke about the pickup in demand seen in July, with one computer and electronics product respondent adding, “The second quarter was a sold quarter from start to finish….”

Looking ahead six months, Texas manufacturers remain positive about future levels of activity. At least 45 percent of those taking the survey expect sales, production, and shipments to increase over the coming months, with just single-digit percentages anticipating declines. Beyond that, 31.5 percent plan to bring on new workers, and one-quarter are expecting to increase their capital expenditures. The one downside would be the forecast of higher raw material costs moving forward, with a pickup in pricing pressures. In all, 40.7 percent predict increased producer prices in the coming months, with just 6.5 percent expecting declines.

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

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Kansas City Fed: Manufacturing Activity Expanded for the Seventh Straight Month in July

The Kansas City Federal Reserve Bank said that manufacturing activity has expanded every month so far in 2014, picking up slightly in July from June. The composite index of general business conditions rose from 6 in June to 9 in July. The pace of growth accelerated in many of the key indicators, including new orders (up from 8 to 12), production (up from 2 to 11), shipments (up from 2 to 14) and employment (up from 1 to 8). One-third of survey respondents said that their production had increased in the month.

There were two negatives in the report, as well. The average workweek (down from 7 to -3) shifted into its first contraction in six months. The percentage of those taking the survey who noted a reduced workweek increased from 12 percent in June to 17 percent in July, enough to tip the diffusion index. In addition, new export orders (up from -11 to -6) continued to fall, albeit at a slower pace of decline for the month. This measure has been in contraction territory in 8 of the past 12 months, indicating weakness on the trade front in the Kansas City Fed’s district.

Nonetheless, there continue to be encouraging signs for the months ahead. The forward-looking composite index increased from 12 to 15, with relatively strong growth anticipated over the next six months. Manufacturers in the region expect higher new orders (up from 14 to 24), production (up from 17 to 23), shipments (up from 20 to 28), employment (up from 14 to 23) and capital expenditures (up from 23 to 25) at rather healthy rates of growth. In fact, over 40 percent predict increased sales, output and shipments, with more than one-third seeing additional hiring and capital spending. Yet, the sample comments also suggest frustrations with attracting qualified workers. Exports are predicted to grow just modestly (unchanged at 6).

Respondents expect pricing pressures to remain elevated, with nearly half of those taking the survey saying that raw material prices should increase over the next six months. Still, 24 percent felt that input costs for them might fall, and the diffusion index for this measure (down from 49 to 46) eased slightly in July.

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

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Continued Progress in China and the U.S., with Europe and Japan Growing More Modestly

The HSBC Flash China Manufacturing Purchasing Managers’ Index (PMI) expanded for the second straight month in July, rebounding from softness from January through May. The headline index rose from 50.7 in June to 52.0 in July, its highest level since March 2011. The underlying data were mostly higher, including new orders (up from 51.8 to 53.7), output (up from 51.8 to 52.8) and exports (up from 50.6 to 52.7). The sales pace was the fastest since January 2011, and each of these measures are a sign that recent stimulative actions taken by the Chinese government have had a positive impact. Some downsides in the PMI survey contracting hiring rates for the 16th consecutive month (up from 48.7 to 49.5) and slightly accelerated raw material prices (up from 50.8 to 52.9).

Meanwhile, Japanese manufacturing activity also expanded for the second straight month, but it eased slightly in July. The Markit/JMMA Flash Japan Manufacturing PMI declined from 51.5 to 50.8. The recent uptick in activity has materialized as the Japanese economy has recovered from an increased in taxes that went into effect on April 1st. Still, manufacturers in the country cannot cheer yet, as output growth came to a halt in July (down from 51.8 to 50.0, or neutral). Other indicators were mixed. Export sales (up from 49.0 to 51.6) and employment (up from 49.8 to 50.8) both shifted to positive growth, but the pace of new orders decelerated somewhat (down from 52.0 to 51.1).

In other news, the Markit Flash Eurozone Manufacturing PMI edged marginally higher, up from 51.8 to 51.9. The Flash Eurozone PMI Composite PMI was up more strongly, increasing from 52.8 to 54.0, suggesting healthier growth in the service sector. For manufacturers, the data suggest slightly faster growth in production (up from 52.8 to 53.0) and exports (up from 52.4 to 52.7), but the pace of growth for new orders (51.9) and employment (50.3) were unchanged.

Overall, these figures provide a limited degree of encouragement for the manufacturing sector in Europe, which has worried of late about slow economic and income growth. It is also still clear that the data vary on country-by-country basis, with German manufacturing activity (up from 52.0 to 52.9) accelerating in July but with French manufacturers noting yet another deterioration in sales and output. Indeed, the French economy remains in a rut, with manufacturing activity positive in just three months since January 2013.

Closer to home, the Markit Flash U.S. Manufacturing PMI decreased from 57.3 to 56.3. Despite the slight easing in July, manufacturing activity continues to grow at relatively decent rates. Through the first seven months of 2014, the top-line index has averaged 55.9, stronger than the 53.5 average noted for 2013 as a whole. The July data show both new orders (down from 61.7 to 59.8) and output (down from 61.0 to 60.4) growing at a healthy paces, albeit with some deceleration for the month. Yet, hiring growth remains more modest (down from 53.8 to 52.1) and export sales (down from 50.9 to 50.6) were just barely growing, suggesting that there remains room for improvement.

Flash data give us an advance estimate of manufacturing activity incorporating “approximately 85% of the usual monthly survey replies,” with the final PMI data for the month released on August 1.

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

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Richmond Fed: Manufacturing Activity Expanding at a Modest Pace

The Richmond Federal Reserve Bank said that manufacturing activity grew at a modest pace, expanding for the fourth straight month. The composite index of general business conditions edged slightly higher, up from 4 in June to 7 in July. Note that historical data in the Richmond Fed survey were revised in this edition to reflect new seasonal adjustments.

Despite the improved top-line figure, the underlying data were largely mixed. The biggest positive was hiring, with the employment index up from 4 to 13. This was the fastest pace of hiring growth since December, which was encouraging. Wage (up from 12 to 16) and shipments (up from 2 to 3) were also higher. Yet, new orders (5) expanded at the same pace, and both capacity utilization (down from 7 to 4) and the average workweek (down from 5 to 3) decelerated somewhat for the month.

Still, manufacturers in the Richmond Fed’s district were mostly upbeat about the next six months, with forward-looking measures increasing in July for many indicators. For instance, new orders (up from 27 to 34), shipments (up from 24 to 36), capacity utilization (up from 18 to 29), employment (up from 12 to 19) and capital expenditures (up from 18 to 19) were all higher, with each suggesting relatively healthy paces of growth.

Inflationary pressures have picked up a bit for the month, but remain mostly in-check. Manufacturers in the region said that prices paid for raw materials grew 1.99 percent at the annual rate in July, up from 1.47 percent in June. Looking ahead six months, respondents expect input costs to increase an annualized 1.89 percent, up only marginally from 1.84 percent the month before.

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

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Empire State Survey Shows Manufacturing Growth at a Four-Year High in July

The Empire State Manufacturing Survey from the New York Federal Reserve Bank increased to its highest level in July since April 2010. The composite index of general business conditions rose from 19.3 in June to 25.6 in July, suggesting that manufacturing activity expanded strongly in the month. The jump in the headline figure was due largely to a drop in the percentage of respondents saying that conditions were worse, down from 21.1 percent in June to 15.0 percent in July. In contrast, 40.6 percent of manufacturers taking the survey said that they felt business was improving, up just slightly from the 40.4 percent who said the same thing the month before.

The underlying data were mostly positive, particularly for shipments (up from 14.2 to 23.6) and employment (up from 10.8 to 17.1). New orders also edged somewhat higher, up from 18.4 to 18.8, mostly from a drop in those saying that sales were lower. Yet, the data also had a couple weaknesses, with the average workweek (down from 9.7 to 2.3) easing a bit and pricing pressures (up from 17.2 to 25.0) picking up.

Looking ahead six months, manufacturers in the New York Fed district continued to be mostly optimistic, albeit with less enthusiasm than the month before. The forward-looking composite index decreased from 39.8 to 28.5, but the data still suggest relatively healthy gains moving forward. Growth rates were slower for a number of indicators, including new orders (down from 44.5 to 25.6), shipments (down from 45.2 to 24.6), hiring (down from 20.4 to 17.1) and capital spending (down from 11.8 to 9.1).

In all, 38.2 percent of respondents anticipate sales to be higher six months from now, with 49.2 percent expanding no changes. Other highlights include a slight increase in technology spending plans (up from 3.2 to 10.2), and reduced levels for inventories (down from 6.5 to -4.6) and the average workweek (down from zero to -4.6).

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

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Michigan Created the Most Manufacturing Jobs in May

The Bureau of Labor Statistics said that Michigan added the most net new jobs in May, hiring an additional 4,500 workers for the month on net. This speaks to the continued rebound of the automotive sector, which added 5,000 employees nationally in May and 10,100 year-to-date. Other states with the most manufacturing jobs hired in May included Minnesota (up 2,900), Ohio (up 2,900), Missouri (up 2,100), Texas (up 1,500), and South Carolina (up 1,400).

Many of these same states had observed the biggest gains in manufacturing employment through the first five months of 2014. For instance, Ohio gets the prize for the largest employment gains among manufacturers year-to-date, adding 7,300 workers on net from January through May. Missouri (up 6,100), Minnesota (up 5,700), Indiana (up 5,100), and Texas (up 5,000) rounded out the top five states.

Looking at the unemployment rate, the state with the lowest rate continues to be North Dakota (2.6 percent), with shale exploration helping to propel economic growth and fuel a skills shortage. Vermont (3.3 percent), Nebraska (3.6 percent), Utah (3.6 percent), South Dakota (3.8 percent), and Wyoming (3.8 percent) also have super-low unemployment rates. At the other end of the spectrum, the state with the highest unemployment rate was Rhode Island (8.2 percent), closely followed by Nevada (7.9 percent), Kentucky (7.7 percent), Mississippi (7.7 percent), and California (7.6 percent).

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

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Philly Fed: Manufacturing Activity Expanded Strongly in June

The Federal Reserve Bank of Philadelphia said that manufacturing activity expanded strongly in June, extending the spring rebound in the region. The Business Outlook Survey’s composite index of general business activity increased from 15.4 in May to 17.8 in June, averaging 16.6 over the past three months. The underlying numbers were mostly positive. There were faster rates of growth for new orders (up from 10.5 to 16.8), shipments (up from 14.2 to 15.5), hiring (up from 7.8 to 11.9), and the average workweek (up from 2.9 to 7.3). Over 39 percent of respondents said that new orders were higher in the month, up from 34.8 percent in the prior survey.

Pricing pressures remain elevated, with raw material costs continuing to edge higher. The index for prices paid rose from 23.0 to 35.0, with 36.2 percent of those taking the survey suggesting that input costs had increased in June. Just over 60 percent said that raw material prices were unchanged, with just 1.2 percent indicating a decline. Moving forward six months, 44.5 percent anticipate their costs to rise, with none expecting them to fall. For the most part, this mirrors the recent producer price index data which has shown core inflation picking up somewhat.

Looking toward the second half of 2014, manufacturers in the Philly Fed district were mostly upbeat. In a special question on production expectations, 73.9 percent of respondents said that they anticipate increased production in the coming months, with nearly 48 percent predicting output growth of more than 4 percent. This corresponds with 59.7 percent who predict increased new orders over the next 6 months.

Employment growth is also expected to increase, but with some mixed news overall. The good news is that 29.0 percent say that they plan to hire additional workers in a special question. Yet, that figure is slightly dwarfed by those who do not indent to hire but plan to increase output through productivity gains (27.5 percent) or more hours for existing staff (11.6 percent). This suggests that firms remain slightly hesitant about adding to their workforce, even as we have seen progress of late on the employment front.

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

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Empire State Survey: Stronger Growth in Manufacturing Sustained in June

The Empire State Manufacturing Survey from the New York Federal Reserve Bank continued to reflect strong growth in June. The composite index of general business conditions remained quite elevated, up from 19.0 in May to 19.3 in June, essentially sustaining the sharp increase seen the month before. In all, just over 40 percent of survey respondents said that business conditions were better in June, with 21.1 percent suggesting that they had worsened. Similar to last month, this was the fastest pace for the composite index since June 2010.

A nice jump in sales helped to push manufacturing sentiment higher for the month, with the index for new orders rising from 10.4 in May to 18.4 in June. The percentage of those taking the survey who reported increasing new orders rose from 31.9 percent to 40.7 percent. The length of the average workweek also widened (up from 2.2 to 9.7). Still, there was some easing in other components, including shipments (down from 17.4 to 14.2) and employment (down from 20.9 to 10.8). The latter suggests a slight deceleration in hiring, but still a decent pace.

Looking ahead six months, manufacturers in the New York Fed district continued to be mostly optimistic. While the forward-looking composite index eased slightly for the month (down from 44.0 to 39.8), this figure still indicates strong growth over the next six months, and other figures suggest accelerating levels of activity. For instance, the pace of new orders (up from 36.7 to 44.5), shipments (up from 33.8 to 45.2), all hiring (up from 17.6 to 20.4) are all expected to pick up in the coming months. Indeed, 55.4 percent anticipate increased new orders over the next six months, which is positive news.

On the down side, the average employee workweek is anticipated to be unchanged (up from -3.3 to zero) moving forward, and the pace of expected capital expenditures (down from 19.8 to 11.8) and technology spending (down from 4.4 to 3.2) both eased this month. Over one-quarter of respondents still plan to increase capital spending in the months ahead, but these figures suggest some cautiousness on the investment side, which we would like to see change.

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

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Manufacturing Job Postings and Net Hiring Picked Up Slightly in April

The Bureau of Labor Statistics said that manufacturing job openings picked up slightly, rising from 258,000 in February to 264,000 in March to 272,000 in April. This suggests that manufacturers have begun to post more openings over the past couple months, rebounding from winter-related softness in January and February. Nonetheless, overall job postings in the sector remain below their recent peak of 298,000 in November, indicating that there is still room for improvement. For instance, these gains were mixed, with increases in durable goods manufacturing job postings (up from 165,000 to 173,000) but reductions for nondurable goods firms (down from 99,000 to 94,000).

The Job Openings and Labor Turnover Survey (JOLTS) data also show a small bump-up in net hiring in April. Interestingly, this increase on net comes from a decline in both hires and separations for the month. The number of manufacturing hires decreased from 248,000 in March to 243,000 in April. At the same time, manufacturing separations – including layoffs, quits and retirements – fell from 243,000 to 231,000. As such, net hiring (or hires minus separations) increased from 5,000 to 12,000.

Net hiring has averaged 9,000 each month from February to April, which represented progress from the net gains of 6,000 and 2,000 in November and December, respectively. Yet, it also remains well below the 22,500 average experienced between August and November of last year when demand and production were expanding more robustly.

Meanwhile, job postings accelerated strongly in April for the larger economy. Total job openings rose from 4,166,000 in March to 4,455,000 in April. This was the fastest pace for job postings since August 2007. This higher figure stemmed from increased postings in the durable goods manufacturing; leisure and hospitality; professional and business services; state and local government; and trade, transportation and utilities.

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

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