Tag: hiring

Georgia Added the Most Manufacturing Employees in August

Georgia added the most net new manufacturing employees in August, according to new state-wide employment data provided by the Bureau of Labor Statistics. Georgia manufacturers hired an additional 5,500 workers in the month. This was followed by Florida (up 4,500), Colorado (up 4,500), Colorado (up 2,100), Illinois (up 2,100) and Michigan (up 2,000). On a year-to-date basis, Georgia also fared well, making the top five states for manufacturing job growth. The top five states for manufacturing job gains through August were Indiana (up 14,300), Ohio (up 9,400), Georgia (up 9,100), Texas (up 9,100) and Michigan (up 7,100).

Since the recession, manufacturers have added 681,000 net new workers. Michigan has added the most manufacturing employees since the end of 2009, hiring 111,300 on net. Other top states since the recession ended include Texas (up 80,100), Indiana (up 72,600), Ohio (up 61,300) and Wisconsin (up 41,600).

In terms of the unemployment rate, North Dakota’s 2.8 percent rate remains the lowest in the United States, with shale exploration continuing to pay benefits that that state’s economy. Nebraska, South Dakota and Utah also have very low unemployment rates, each with 3.6 percent of their populations unemployed. At the other end of the spectrum, Georgia (8.1 percent) has the highest unemployment rate, followed by Mississippi (7.9 percent), Rhode Island (7.7 percent), the District of Columbia (7.6 percent) and Nevada (7.6 percent).

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

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Philly Fed: Manufacturing Activity Eased Slightly, but Growth Remains Strong

The Federal Reserve Bank of Philadelphia said that manufacturing activity eased slightly, but growth remained strong in its district. The Manufacturing Business Outlook Survey’s composite index of general business activity declined from 28.0 in August to 22.5 in September. While the figure decreased somewhat, it is important to note that August’s reading was the fastest pace since March 2011, and a modest pullback should have been anticipated. Many of the key indicators continued to expand at healthy rates, keeping the underlying trends positive.

As evidence of this, the paces for new orders (up from 14.7 to 15.5), shipments (up from 16.5 to 21.6) and employment (up from 9.1 to 21.2) accelerated. The percentage of respondents saying that their sales had increased in the month rose from 32.3 percent in August to 37.6 percent in September. Roughly one-quarter of respondents noted additional hiring in both months, with the percentage citing declines in employment dropping from 15.6 percent to 4.5 percent. Therefore, fewer manufacturers were cutting workers in September, which was encouraging. Still, the average workweek (down from 13.3 to 4.4) narrowed a bit.

Manufacturers remained overwhelmingly upbeat in their outlook despite a decrease in the forward-looking composite measure (down from 66.4 to 56.0). In fact, 55.1 percent of respondents anticipate increased new orders in the next 6 months, with 58.8 percent seeing higher shipment levels. Regarding employment, 43.6 percent expect to add new workers in the coming months, with just 4.0 percent indicating possible declines. Capital spending (up from 17.5 to 23.7) was also expected to increase at decent rates. The one downside was pricing pressures for raw materials, with almost half of those taking the survey predicting higher input costs ahead.

As further evidence of this optimism, manufacturers responded to a special question about production in the third quarter. Nearly 59 percent of them said that output would increase for their company in the third quarter relative to the second quarter, with 28.7 percent stating declines. On average, production was expected to increase by 2 percent in the third quarter. For the fourth quarter, those predicting an acceleration in activity (53.8 percent) outpaced those forecasting a deceleration (21.2 percent).

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

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NY Fed: Manufacturing Activity Expanded Strongly in September

The Empire State Manufacturing Survey from the New York Federal Reserve Bank reported a strong increase in activity in September, its fastest pace in nearly five years. The composite index of general business conditions rose from 14.7 in August to 27.5 in September, with almost 46 percent of those taking the survey saying that conditions had improved in the month. Other measures were mostly positive, as well, including faster paces for new orders (up from 14.1 to 16.9) and shipments (up from 24.6 to 27.1).

Yet, there were also some challenges, most notably in the labor market. Hiring eased in September, with the index for the number of employees dropping from 13.6 to 3.3. This decline stemmed from an increase in those respondents who said that their employment levels had decreased, up from 5.7 percent in August to 16.3 percent in September. Along those lines, the average employee workweek (down from 8.0 to 3.2) also narrowed.

Pricing pressures continued to be elevated, even as there was a marginal improvement for the month. The index for raw material prices declined slightly, down from 27.3 to 23.9, but that still represents a significant percentage of manufacturers in the Fed district seeing input costs rise. That is expected to continue over the next six months, with nearly 46 percent of respondents anticipating higher prices.

The other forward-looking measures continue to find a mostly optimistic outlook in the New York Fed region. There was a slight pullback in many of the measures assessing the next six months, but manufacturing leaders remain upbeat overall. In fact, 57.1 percent of those completing the survey predict sales increases, or about the same proportion as those anticipating higher shipments. Just over one-quarter expect to add more workers in the coming months, with 29.4 percent planning additional capital expenditures.

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

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NFIB: Small Business Optimism Ticked Higher in August

The National Federation of Independent Business (NFIB) said that small business sentiment ticked higher in August, rising to its second-highest level in seven years. The Small Business Optimism Index increased from 95.7 in July to 96.1 in August. After peaking at 96.6 in May, the index eased somewhat in June, and August’s reading suggests that confidence has once again begun to climb back. Over a longer time frame, it is clear that small business owners have become more positive over the past six months, with the index at just 91.4 in February.

With that said, the underlying data were slightly mixed. On the positive side, the percentage of small business owners with job openings right now increased from 24 percent to 26 percent, continuing an upward trend. Along those lines, the percent planning to make capital expenditures over the next 3 to 6 months rose from 23 percent to 27 percent, its fastest pace since November 2007 (the month before the official start of the recession). On the topic of inflation, pricing pressures have decelerated a bit, with the net percentage of those predicting price increases over the next 3 months declining from 22 percent to 19 percent.

Yet, the report also reflected some soft spots. For instance, sales expectations over the next 3 months dipped from a net percentage of 10 percent to 6 percent. In addition, the percentage suggesting that the next 3 months were a “good time to expand” was off slightly from 10 percent to 9 percent. Nonetheless, the outlook data do reflect an upward trend overall, rising from 6 percent in February. For those saying that it is not a good time for expansion, the top reasons cited continue to be economic conditions and the political climate. Taxes were the listed as the “single most important problem” by 24 percent of respondents, followed by government regulations (19 percent), poor sales (13 percent) and labor quality (11 percent).

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

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Monday Economic Report – September 8, 2014

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

The U.S. economy added 142,000 nonfarm payroll workers in August, a disappointing figure given signs of a rebound in many other indicators lately. The consensus expectation had been for nonfarm payroll growth to exceed 200,000 jobs for the seventh consecutive month, as was observed in the estimates provided by ADP the day before. Manufacturing employment was flat for the month, which was also a disappointment. It ended a 12-month streak of job gains for the sector, a period in which manufacturers added 168,000 net new workers. Hopefully, the August jobs report was just a brief pause in what otherwise had been positive news on the labor front.

The Institute for Supply Management’s (ISM) purchasing managers’ index (PMI) data provides much encouragement that manufacturing activity is moving in the right direction heading into the autumn months. The headline PMI figure rose from 57.1 in July to 59.0 in August, its highest level since March 2011, and it reflected a robust recovery from weaknesses earlier in the year. Indeed, new orders and production expanded at healthy paces. These findings mirror the latest NAM/IndustryWeek Survey of Manufacturers, which is being released this morning, showing respondents mostly upbeat about their own company’s outlook, with sales, capital spending and hiring expectations at two-year highs. Indeed, 87.3 percent of those taking the survey were either somewhat or very positive in their outlook, up from 85.9 percent three months ago. The data are largely consistent with 3.1 percent growth in manufacturing production over the next two quarters.

Manufacturers spent 4.4 percent more on construction projects in July, also providing some reassuring news. The sector has devoted 23.9 percent more to construction projects over the past 12 months, an indication that the increase in demand and output observed over that time frame has resulted in a jump in new investments. Meanwhile, new factory orders data provided mixed news. While orders increased by a whopping 10.5 percent in July, much of that stemmed from highly volatile nondefense aircraft sales. Excluding transportation orders, new factory orders declined 0.8 percent for the month, a finding that we had noted in the earlier release of preliminary durable goods data. Still, factory orders excluding transportation have risen 2.7 percent over the past six months (since weather-related declines in January), which mostly mirrors the more positive data in other releases.

Looking at exports, the U.S. trade deficit narrowed ever-so-slightly in July, with an increase in goods exports marginally offsetting an increase in goods imports. Yet, manufactured goods exports have risen only slightly year-to-date, up just 0.8 percent so far in 2014 using non-seasonally adjusted data. On the other hand, these same figures show that exports to our top five exports markets were higher through the first seven months of this year relative to last year. Regardless, manufacturers hope that the pace of export growth accelerates, with sluggish sales frustrating business leaders and net export growth providing a drag on real GDP over the past two quarters.

This week, we will get new data on consumer confidence, job openings, retail sales and small business optimism. Markets will also continue to digest Friday’s employment numbers, trying to decipher if they were an aberration or a sign of larger weaknesses. In particular, this discussion centers on how the Federal Reserve will interpret such things, with a debate already ongoing as to when the Federal Open Market Committee will begin to increase short-term interest rates. Conventional wisdom holds that short-term interest rates will rise sometime in 2015, but whether that occurs earlier or later in the year is up for debate between those who are more hawkish or dovish on inflation. In the Beige Book, which was released last Wednesday, the Fed mostly observed progress in the economy in recent months, including in manufacturing. Yet, as long as the Fed continues to see “slack” in the labor market, it might be less willing to normalize rates.

Chad Moutray is the chief economist, National Association of Manufacturers. 
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Hiring Growth Took a Holiday in August, with Manufacturing Employment Unchanged

The Bureau of Labor Statistics (BLS) said that manufacturing employment was unchanged in August, ending a 12-month streak of job gains in the sector. Over the course of the past year, manufacturers have added 168,000 net new workers, with average job growth of 13,538 per month over that time frame. Still, it is hard not to be disappointed with these results. Other recent indicators have reflected a pickup in activity this summer, with ADP’s estimate yesterday showing 23,000 additional workers hired in August. The expectation had been for strong growth in hiring in August in the BLS numbers, as well. Hopefully, predictions of increased demand and output will lead to more hiring in the coming months, with August’s figures just being a pause in an otherwise upward trend.

On a sector-by-sector basis, the August manufacturing jobs figures were mixed, with a gain of 2,000 workers in durable goods industries offset by a 2,000-employee decline among nondurable goods firms. The largest employment gains were in nonmetallic mineral products (up 2,900), machinery (up 2,500), wood products (up 1,700), food manufacturing (up 1,500) and chemicals (up 1,500). Transportation equipment employment fell substantially, down 9,200, with motor vehicles and parts alone dropping 4,600. Other sectors with declining employment included miscellaneous nondurable goods (down 3,100), plastics and rubber products (down 1,100), paper and paper products (down 900) and apparel (down 500).

Despite the underwhelming job gains, average weekly earnings in the sector were slightly higher, up from $1,017.59 in July to $1,022.13 in August. Over the course of the past 12 months, average weekly earnings have risen 2.3 percent. At the same time, the average number of hours worked was up only marginally, increasing from 40.9 hours to 41.0 hours with overtime unchanged at 3.4 hours.

Meanwhile, nonfarm payroll growth was also disappointing, up just 142,000 in August. Total job gains were expected to exceed 200,000 for the seventh straight month, mirroring the ADP estimates yesterday of an increase of 204,000. Nonetheless, the unemployment rate decreased to 6.1 percent in August, down from 6.2 percent in July but returning to the rate observed in June. The participation rate also returned to its June level of 62.8 percent, keeping it near 30-year lows.

Overall, today’s jobs numbers were frustrating, particularly given the strength seen in a host of other data points. Perhaps hiring activity took a holiday in August. My view is that hiring will pick up in the coming months, with accelerated levels of new orders and production leading to more employment growth. As such, we should revert to an average of 12,500 to 15,000 per month job gains for the rest of this year.

Still, this report could also feed into anxieties among some that the economic growth remains less-than-desired, with the recovery still not gaining the traction that we have long been waiting for. For that reason, manufacturers continue to urge the enactment of pro-growth initiatives to better ensure strength in the economy moving forward.

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

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ADP: Manufacturers Added 23,000 Workers in August

Automated Data Processing (ADP) said that manufacturers added 23,000 workers in August, its largest monthly gain since December 2012. It was also the seventh straight increase in net hiring for the manufacturing sector, rebounding from a weather-related decline in January. Over the course of the past 12 months, manufacturers have expanded employment by 115,000, averaging just over 12,000 new employees per month over that time frame. Note that this is somewhat lower than the 15,000-per-month average seen in Bureau of Labor Statistics (BLS) figures since last August.

In the larger economy, nonfarm private businesses added 204,000 employees on net in August, averaging 218,000 since January and 206,000 over the past year. These trends are largely consistent with official government data, which also have reflected healthy gains in employment during that time frame. Tomorrow’s BLS jobs figures are also expected to be strong, with a consensus expectation of 220,000.

In August, the largest job gains were seen in the professional and business services (up 51,000); trade, transportation and utilities (up 28,000); construction (up 15,000); and financial activities (up 5,000). Small and medium-sized businesses (e.g., those with less than 500 employees) contributed three-quarters of the net new jobs.

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

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ISM: Manufacturing Activity Expanded Very Strongly in August

The Institute for Supply Management’s (ISM) manufacturing purchasing managers’ index (PMI) rose very strongly, with the headline figure rising from 57.1 in July to 59.0 in August. This was the highest level since March 2011, and it reflected a robust recovery from weaknesses earlier in the year.  Indeed, new orders (up from 63.4 to 66.7) and production (up from 61.2 to 64.5) appear to be expanding at quite healthy paces, with indices for both exceeding 60 once again. The production measure has been over 60 for three straight months; whereas the new orders index was at its fastest pace since April 2004. Export sales (up from 53.0 to 55.0) were also improved.

The sample comments tend to echo these strong figures. As one electrical equipment manufacturer said, “Overall business is improving. Order backlog is increasing. Quotes are increasing. Much more positive outlook in our sector.” This pretty much summed up the increase in demand seen in many of the other comments, as well. Yet, those taking the ISM survey also noted some challenges, particularly the geopolitical risks and the ability to attract labor. The other concern noted in past surveys was pricing pressures, but they appear to have eased somewhat in August (down from 59.5 to 58.0).

On this latter point, the employment index was marginally lower (down from 58.2 to 58.1), but hiring growth has clearly picked up from recent months. The hiring index averaged 52.7, for instance, through the first six months of the year, further highlighting the July and August acceleration in the data. This should bode well for manufacturing jobs numbers out on Friday, which have averaged 22,000 between May and July and 15,000 each month over the past year.

Overall, this report shows that manufacturers are seeing strong growth more recently in demand and output, which is definitely positive given the disappointing start to the year. Manufacturing leaders are mostly positive about the second half of 2014, even as they are keenly aware of possible risks on the horizon. This includes geopolitical events, a cautious consumer and labor shortages, among other concerns. Still, it is nice to see the sector hitting on all cylinders, and the outlook for strong growth over the coming months remains positive.

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

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Richmond Fed: Manufacturing Activity Expanded at Fastest Pace in Three Years

The Richmond Federal Reserve Bank said that manufacturing activity expanded at its fastest pace since March 2011 in August. The composite index of general business conditions rose from 7 in July to 12 in August, marking the fifth consecutive monthly expansion after winter-related contractions in both February and March. Indeed, much like other regional surveys, these data show an uptick in demand and production for manufacturers this summer, with a mostly upbeat assessment for the coming months.

Looking specifically at current activity, manufacturing leaders in the Richmond Fed district noted increased paces for many of the key measures. This included new orders (up from 5 to 13), shipments (up from 3 to 10), capacity utilization (up from 4 to 17) and the average workweek (up from 3 to 8). The index for employment (down from 13 to 11) edged slightly lower, but it still indicated decent growth in hiring and improvement from earlier this year. (Hiring growth was flat as recently as February.)

Enhanced perceptions about the current economic environment also carried through to better expectations about the future. The forward-looking indices for manufacturing activity were mostly higher, and each suggested relative strength over the next six months. For instance, the expected new orders variable rose from 34 to 47, its highest point since December 2010. Manufacturers also planned to expand employment (down from 19 to 18) and invest in more capital (up from 19 to 27), even though the former’s pace eased marginally for the month.

Inflationary pressures decelerated somewhat in August after increasing in July.  Manufacturers in the region said that prices paid for raw materials grew 1.39 percent at the annual rate in August, down from 1.99 percent in July. Yet, looking ahead six months, respondents expect input costs to increase an annualized 2.05 percent, up from 1.89 percent the month before. This suggests that businesses anticipate modest gains in input prices over the course of the second half of 2014, mostly in-line with Federal Reserve projections.

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

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Manufacturers in Texas Continue to Grow, but at a Somewhat Slower Pace in August

The Federal Reserve Bank of Dallas said that manufacturing activity continued to grow, but at a slower pace in August. The composite index of general business activity declined somewhat from 12.7 in July to 7.1 in August. It was the 15th consecutive month of expanding levels of activity; however, manufacturers reported a near-stagnant pace in February. As such, it suggests that manufacturing sentiment has rebounded since weather and other factors negatively impacted activity earlier in the year.

Nonetheless, with the composite index lower, many of the key subcomponents were less positive in August than in July. This included new orders (down from 13.0 to 2.2), production (down from 19.1 to 6.8), shipments (down from 22.8 to 6.4), hours worked (down from 6.3 to 2.9) and capital expenditures (down from 13.3 to 6.6). Hiring (down from 11.4 to 11.1) was only slightly lower, but still registering decent growth overall.

The declines in many of these indicators could simply be the result of very strong growth over the past few months, with August’s indices mostly sustaining past gains before moving forward. If that is the case, these latest data could reflect a “breather” before continued expansion in the months ahead.

In fact, manufacturers in the Dallas Fed region remain mostly positive about the next six months. The forward-looking measure of one’s company outlook rose from 24.4 in July to 30.1 in August, and several of the underlying data points also moved higher for the month. Over half of the survey respondents anticipate increased sales, production and shipments in the future, with nearly one-third planning new hires and over one-quarter expecting to increase their capital spending. The one negative remains elevated pricing pressures, with 45.5 percent of those taking the survey seeing higher input costs over the next six months versus just 1.9 predicted lower costs.

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

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