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
A State of Manufacturing Tour guest blog post by Jim Roche, president of the Business & Industry Association, New Hampshire’s statewide Chamber of Commerce
Today, the National Association of Manufacturers (NAM) kicked off its 2016 State of Manufacturing Tour in New Hampshire—and with good reason! New Hampshire is a hotbed of innovative manufacturing and home to the first-in-the-nation presidential primary less than two weeks from now.
Here at the Business & Industry Association (BIA) of New Hampshire, the NAM’s official affiliate in the Granite State, we fight every day for policies that support our manufacturers—our state’s most important job creators. We push state legislators, the governor, our congressional delegation and regulators for public policy and commonsense solutions that are friendly to job creators and promote prosperity for New Hampshire businesses.
At today’s stop, the NAM laid out several key public policies that will help put manufacturing in America on solid ground, including important ideas like fixing our outdated tax code and upgrading old infrastructure to take us toward a more modern economy.
Today’s tour also highlighted the many ways manufacturers are changing our lives for the better. Manufacturing has grown well beyond the outdated images of mill and textile work, particularly in New England. Today, manufacturing leads in electronics, fabricated metals, machinery and technology. And manufacturing is connecting people across continents. The sector offers outstanding jobs and careers for nearly 68,000 New Hampshire workers. New Hampshire’s manufacturers export almost $4 billion of goods around the world every year, bringing new wealth and economic activity into our state’s economy.
As we move deeper into this important election season, manufacturing voters are asking candidates hard questions about how they will help America compete to win in a global economy. No matter the outcome of the election, we need policies that support today’s diverse and dynamic manufacturers. When manufacturing succeeds, we’re all better off.
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 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
The Bureau of Labor Statistics said that manufacturers lost 9,000 workers in September, extending the 18,000 declines seen in August. These numbers are disappointing, as they show just how sluggish growth has become in the manufacturing sector over the past few months, mirroring the stagnant ISM data released yesterday. Since January (or over the past eight months), the manufacturing sector has netted zero net new jobs, with 27,000 workers lost in just the past two months. In the second half of 2014, manufacturers were hiring at the more-robust pace of 20,667 workers per month on average, illustrating a significant pullback in employment growth year-to-date. Indeed, manufacturers have grappled for much of this year with headwinds from abroad, a strong U.S. dollar, gridlock in Washington on critical market-opening policies and lower crude oil prices – each of which have combined to dampen demand, production and hiring. Read More
The Bureau of Labor Statistics said that manufacturers added 15,000 net new workers in July, the fastest pace since January. This was an encouraging figure – one that is closer to the monthly average of last year when activity in the sector was growing more robustly. Yet, it is important to note that manufacturing employment growth in the sector was more spotty than we might prefer, suggesting that we are not out of the woods yet from recent weaknesses. Nondurable goods firms added 23,000 workers, led by food (up 9,100), plastics and rubber products (up 5,800), paper and paper products (up 2,500) and petroleum and coal products (up 1,400). In contrast, durable goods hiring remained challenged, down by 8,000. The largest declines were seen in the computer and electronic products (down 3,100), machinery (down 1,600), motor vehicles and parts (down 1,400) and primary metals (down 1,100). Read More
Here is the summary for this week’s Monday Economic Report:
According to the latest NAM/IndustryWeek Survey of Manufacturers, which will be released this morning, business leaders remain mostly confident about activity over the coming months. In fact, 88.5 percent of respondents said they were either somewhat or very positive about the own company’s outlook, and the data are consistent with 3 percent growth in manufacturing production over the next two quarters. Yet, manufacturers who replied to this survey were slightly less upbeat than they were three months ago, when 91.2 percent of respondents were positive in their outlook. Sales, exports and hiring expectations over the next 12 months also decelerated slightly, even as they remain improved from the paces seen a year ago. Read More
The Bureau of Labor Statistics said that Wisconsin created the most net new manufacturing workers in October, hiring 5,400 additional employees for the month. Other states with significant increases in manufacturing employment in October included Pennsylvania (up 2,700), Indiana (up 2,500), Minnesota (up 2,300), Oregon (up 2,200) and South Carolina (up 2,100). Looking over the past 12 months, the five states with the greatest manufacturing employment gains were Indiana (up 24,100), Texas (up 14,900), Ohio (up 13,700), Wisconsin (up 12,100) and Minnesota (up 10,500). Read More
Here is the draft summary for this week’s Monday Economic Report:
The U.S. economy grew an annualized 4.6 percent in the second quarter of this year, its fastest pace since the fourth quarter of 2011. Consumer and business spending were the big bright spots in the real GDP report, with strong rebounds after softness in the first quarter. This latest revision reflected improved nonresidential fixed investment and goods exports data relative to prior estimates. At the same time, it is hard to forget that real GDP fell by 2.1 percent in the first quarter, with growth in the first half of 2014 expanding by a frustratingly slow 1.2 percent. Moving forward, manufacturers remain mostly upbeat. For instance, the Markit Flash U.S. Manufacturing Purchasing Managers’ Index (PMI) held firm at 57.9, its fastest pace since May 2010.
I estimate real GDP growth of 3.3 percent for the third quarter, which ends this week. Nonetheless, there are a number of downside risks, and business leaders and the public remain tentative in their optimism.
Along those lines, regional surveys from the Kansas City and Richmond Federal Reserve Banks continued to show expanding activity levels in their districts. The Richmond release found that activity has now grown for six straight months since winter-related contractions earlier in the year. It also reflected an uptick in production and demand, with the pace of hiring accelerating to its highest level since December 2010. All of this was encouraging. In the Kansas City district, manufacturers remained mostly positive, with more than half of respondents expecting increased production and shipments in the next six months. Among the issues cited in the Kansas City survey, manufacturers noted persistent challenges in attracting and retaining skilled workers. Other sample comments mentioned rising pricing pressures, both for wages and raw materials.
Turning to the global economy, the HSBC Flash China Manufacturing PMI edged slightly higher, up from 50.2 in August to 50.5 in September. This marked the fourth consecutive month with expanding manufacturing activity, improving from contractions in the first five months of the year. Yet, even with some signs of stabilization in China in recent data, the country is expected to continue to decelerate in its growth rates moving forward, something that it continues to grapple with. Similarly, the European Central Bank has struggled to cope with slow economic and income growth in the Eurozone, with persistent worries about deflation. Indeed, the Markit Flash Eurozone Manufacturing PMI eased yet again, down from 50.7 to 50.5. This was the lowest level of growth since July 2013, the first month that the Eurozone emerged from its deep two-year recession.
Meanwhile, housing data released last week were mixed. New home sales rose sharply, up from an annualized 427,000 in July to 504,000 in August. This was the highest level in more than six years, and the pace of sales in August starkly contrasts with what we have seen so far in 2014. This makes it likely that September figures will pull back a little, but the trend line remains promising. In contrast, existing home sales decreased 1.8 percent in August, which was disappointing given recent improvements. It is likely that August’s decline was the result of a strong July reading, with some easing probably inevitable. Moving forward, the expectation is that existing home sales should move higher, continuing a longer-run trend in the data since March.
This week, the focus will be on jobs. After a disappointing employment report in August, we anticipate better news in September. I would not be surprised if the zero jobs figure in August for manufacturing was revised higher, and I continue to expect manufacturing jobs gains to revert to an average of 12,500 to 15,000 per month for the rest of the year. Nonfarm payrolls should once again exceed 200,000 in September, an improvement from the 142,000 figure in August (which is also likely to get revised upward). Other highlights this week include the latest data on construction spending, factory orders, international trade, personal income and manufacturing activity in the Dallas Federal Reserve district.
Chad Moutray is the chief economist, National Association of Manufacturers.
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.