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.