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.