The latest data on manufacturing employment provides a bit of encouragement for manufacturers that have been beleaguered by the global slowdown and pullbacks in the energy sector. The Bureau of Labor Statistics said that manufacturing employment rose by 29,000 in January, much stronger than expected at the start of the new year. It was the fourth consecutive monthly job gain and the strongest since November 2014, when manufacturing demand and production were growing more robustly than seen today. There are currently 12.36 million workers in the sector, with manufactures adding 903,000 more employees since the Great Recession. At the same time, it is important to note that employment growth has been quite soft for much of the past year, with the sector adding just 33,000 workers in 2015. Read More
The Institute for Supply Management (ISM) said that manufacturing sentiment remained somewhat negative in January. The purchasing managers’ index for the sector edged marginally higher, up from 48.0 in December to 48.2 in January. It was the fourth straight month with the headline PMI under 50, which would suggest contracting sentiment among manufacturers over that time frame. This mainly reflected deteriorating employment (down from 48.0 to 45.9) and inventories (unchanged at 43.5), with the decline in hiring at its lowest level since June 2009, the last official month of the Great Recession. Indeed, manufacturers continue to worry about the impact of the global slowdown as we start the new year. This can be seen in export growth (down from 51.0 to 47.0). The exports index has contracted in seven of the past eight months on the strong dollar and soft growth abroad. Read More
While Manufacturers had a more positive month than expected, adding 8,000 jobs in December, 2015 will go down one of the softest years for employment growth in the sector since the Great Recession. All in, manufacturers added 30,000 workers on net in 2015, well below the 215,000 workers hired in 2014.
Nondurable goods employment increased by 14,000 workers in December, but total hiring in the manufacturing sector was pulled lower by a reduction of 6,000 employees from durable goods firms. The strongest gains in December were seen in the food manufacturing (up 3,500), miscellaneous durable goods (up 3,500), plastics and rubber products (up 3,300), chemicals (up 2,500) and furniture and related products (up 2,100) sectors. In contrast, machinery (down 6,300), transportation equipment (down 3,300, including a loss of 2,400 for motor vehicles and parts), primary metals (down 2,800) and fabricated metal products (down 1,500) each experienced significant declines for the month. Read More
ADP said that manufacturers added 2,000 workers on net in November, extending the 4,000 increase observed in December. That followed declines in five of the seven months prior to that, highlighting the softness of employment growth in the sector for the year as a whole. Indeed, hiring was essentially flat in 2015, easing sharply after adding 1.35 million workers in 2014. A strong dollar, weaknesses in the energy sector and sluggish export growth have combined to challenge manufacturers in the United States, with demand, production and hiring growth all dampened. Hopefully, we will begin to see a rebound in activity in 2016; although, expectations remain muted with lingering headwinds.
The Empire State Manufacturing Survey reflected contracting levels of activity for the fifth straight month in December, albeit at a slower pace. The composite index of general business conditions improved from -10.7 in November to -4.6 in December. It was the best reading of the headline index since July’s 3.9 figure. The improvement could be seen in growth of shipments (up from -4.1 to 5.5) for the month, which expanded for the first time since July, and a slower rate of decline for new orders (up from –11.8 to -5.1). Looking more closely at the new orders figures, the percentage of respondents saying that their sales had declined for the month has fallen from 37.2 percent in October to 30.6 percent in this latest report. That represents progress of some sort, but it must also be compared to the one-quarter of those completing the survey who had increased new orders. Read More
The National Federation of Independent Business (NFIB) said that optimism was unchanged in October. The Small Business Optimism Index remained at 96.1 in October, representing some progress since the 94.1 reading observed in June. Coincidently, the index was 96.1 in October 2014, as well. Overall, it is also clear that small business owners remain anxious about the economy, with index values under 100 typically coinciding with softer economic growth. With that said, there were also positive developments for the month. For instance, the percentage of respondents saying that the next three months were a “good time to expand” increased from 12 percent to 13 percent, its highest level since February. This figure has trended higher over the past year, averaging 9.8 for all of 2014 and 11.6 year-to-date for 2015. Meanwhile, the percent planning capital expenditures over the next three to six months rose from 25 percent to 26 percent. Read More
The Bureau of Labor Statistics said that nonfarm payrolls increased by a surprisingly strong 271,000 workers in October. This was well above the consensus estimate of around 180,000, and it suggests that hiring has begun to rebound again after a lull in August (153,000) and September (137,000). Even with some progress this month, it is worth noting that nonfarm payroll growth has averaged 206,200 per month year-to-date, down from 280,833 per month in the second half of last year. Meanwhile, the unemployment rate fell to 5.0 percent, which was the lowest level seen since April 2008. Moreover, the so-called “real” unemployment rate – which includes marginally attached workers by those employed part-time for economic reasons – was 9.8 percent, the first time this rate has fallen below 10 percent since May 2008. It peaked at 17.1 percent six years ago.
The overall strength in this report should serve to enhance the chances that the Federal Reserve will begin to raise short-term interest rates at its December meeting, which was already becoming the conventional wisdom. Read More
ADP said that manufacturing employment fell by 2,000 on net in October, declining for the sixth time year-to-date. Indeed, the sector has shed 12,000 workers through the first ten months of 2015, according to ADP, reflecting the significant challenges faced by manufacturers right now. A number of headwinds have hampered demand, production and hiring growth, ranging from the strong dollar to economic softness abroad to lower crude oil prices. To illustrate just how much has changed in the labor market so far this year, manufacturers hired roughly 19,000 new workers per month on average in the second half of 2014, when activity was growing more robustly. Read More
Activity rebounded in October in the United States, with the Markit Flash U.S. Manufacturing PMI jumping to its highest level since May. The composite measure rose from 53.1 in September to 54.0 in October, boosted by stronger output growth (up from 53.7 to 54.0) and a shift to slightly positive exports (up from 49.8 to 50.6). At the same time, new orders (down from 54.7 to 54.0) and employment (down from 52.2 to 51.4) both eased a bit for the month. These data suggest modest growth in demand and production for manufacturers in the U.S., even as the rate of growth for each remains slower than what was observed in the spring. The headline index peaked at 55.7 in March year-to-date, with the output index measuring a fairly robust 58.2 that month, but activity has decelerated since then on a number of global economic headwinds. Read More
The Kansas City Federal Reserve Bank said that manufacturing activity in its district declined for the eighth straight month, but it stabilized a bit in October. The composite index of general business conditions improved from -8 in September to -1 in October. This measure has been in negative territory in each month since March, with reduced crude oil prices, the strong dollar and weaknesses abroad pressuring the sector’s performance. At the same time, the October headline number was not far from being neutral, providing some encouragement. Indeed, much of this increase stemmed from a recovery in the pace of new orders (up from -8 to 7), its first positive reading so far this year, with production (up from 1 to 4) expanding slightly for the second consecutive month. Read More