Tag: Jobs

Monday Economic Report – January 7, 2013

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

With a last-minute deal to avert the fiscal cliff, manufacturers have fewer uncertainties to worry about at the start of the new year. The threat of an economic downturn appears to have largely dissipated, with modest growth in real GDP of 2 percent or so expected this year. However, while the agreement ensures that tax rates for most individuals will remain the same, marginal tax rates will rise for some manufacturing companies that are organized as pass-through entities.

The agreement delays budget sequestration for two months, but that only extends the uncertainty over how this matter will be resolved. In addition, policymakers did not even begin to address the long-term fiscal challenges that confront us by ensuring meaningful tax and entitlement reforms. However, because of the structure of the agreement, they will have additional opportunities to do so over the next few months when they must address the debt ceiling limit, sequestration and the soon-to-expire continuing resolution that funds the government.

The data released last week tended to reflect an economy that was strengthening, even as it continues to show signs of persistent weaknesses. On the employment front, manufacturers added 25,000 net new workers. This is a healthy figure to end the year on, with 180,000 additional jobs in 2012 and 522,000 since the end of 2009. Still, the pace during the second half of the year was much slower than the first half, and it would be encouraging to see the sector producing outsized output and employment growth again. Sentiment surveys have tended to show some manufacturers pulling back on hiring. This might change if business leaders see an economy on more solid footing.

There are some signs that the U.S. and global economic environments have stabilized. As noted in the Global Manufacturing Economic Outlook released on Friday, January 4, seven of our top 10 markets for manufactured goods are growing—an improvement from just three months ago when much of the world outside of North America was experiencing declines. Looking specifically at the U.S. market, the Institute for Supply Management’s (ISM) Purchasing Managers’ Index (PMI) shifted from contraction to a slight expansion last month, with export orders and hiring helping to lift the measure. While there is still much progress to be made on this front, the positive PMI number is good news. Similarly, the Dallas Federal Reserve Bank reported higher activity levels and increased manufacturing business confidence in its region.

This week, the key highlight will come on Friday with the release of new international trade data for November. The October data reflected reduced exports and imports as a result of slowing global growth. With improvements in some countries, we will see if manufactured goods exports begin to pick up. Other numbers to watch include data on consumer credit, job postings and small business optimism.

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

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Stronger Manufacturing Gains in December, Challenges Remain

According to the Bureau of Labor Statistics the manufacturing sector added 25,000 net new workers in December, its strongest monthly gain since March. This stands in contrast to the ADP figures released yesterday, which have found six straight months of declining manufacturing employment. The official government data reflect a more-positive uptick for the sector.

Over the course of 2012, manufacturers hired an additional 180,000 workers on net, or 10 percent of all nonfarm payroll jobs created this year, the majority of which were created in the first half of 2012. This was slower growth than we had hoped to see, clearly the fiscal cliff and other uncertainties had an impact in the second half of the year. 

Looking more specifically at the December manufacturing employment numbers, durable and nondurable goods sectors added 11,000 and 14,000 workers, respectively. Most of these gains can be largely contributed to rebuilding after Sandy as construction jobs also saw an increase of 30,000.

The largest gains were seen in the motor vehicle and parts (up 4,800), food manufacturing (up 4,500), chemicals (up 4,300), nonmetallic mineral products (up 3,500), plastics and rubber products (up 2,100), and machinery (up 2,000) businesses.

Even with this uptick in December several areas of weakness were found in manufacturing. We saw losses in electrical equipment and appliances (down 2,100), fabricated metal products (down 700), paper and paper products (down 500), apparel (down 400), and furniture and related products (down 400). (continue reading…)

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ADP: Stronger Nonfarm Payrolls, But Manufacturing Employment Falls

Automated Data Processing (ADP) reported that nonfarm payrolls rose 215,000 in December, its strongest gain since February. The bulk of these jobs stemmed from the service sector (up 187,000), but there was also a healthy contribution from construction (up 39,000). The latter was the result of an improving housing market.

In contrast to these more-positive numbers, manufacturing continues to struggle. Manufacturers lost 11,000 workers on net in December, or 65,000 over the past six months. Indeed, there have been notable declines in production and new orders in the second half of this year, with economic uncertainties and slowing global growth forcing many businesses to pull back. Employment in a number of sentiment surveys have also indicated some hesitance for additional hiring; although, that sentiment might change in the coming months if the economy appears to be firming up.

Medium-sized (e.g., those with 50-499 employees) and larger (e.g., 500 or more employees) businesses accounted for the bulk of the net job increases in December. In the two size groups, there were 102,000 and 87,000 additional employees on net, respectively. Smaller businesses with less than 50 employees contributed 25,000 workers to the total.

In addition to the sectors listed above, other industries with more workers in December included trade, transportation, and utilities (up 53,000), professional and business services (up 37,000), and financial activities (up 14,000).

Tomorrow, we will receive official government data on employment from the Bureau of Labor Statistics. The consensus estimate is for 150,000 net new nonfarm workers, with manufacturing job gains continuing to be weak.

Chad Moutray is chief economist, National Association of Manufacturers.

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Manufacturing Employment Falls in November

Nonfarm payroll gains were slightly higher than anticipated in November, according to the Bureau of Labor Statistics. The consensus estimate had been for roughly 100,000 or so nonfarm payroll workers added in the month, and today BLS reported that there were 146,000 additional workers added in November.

Part of the higher figure stems from the fact that Hurricane Sandy had less of an impact than some economists expected. The other surprising element was the reduction in the unemployment rate from 7.9 percent to 7.7 percent. This phenomenon was largely the result of a reduced participation rate, from 63.8 percent to 63.6 percent.

In November we saw more bad news for the manufacturing sector. Manufacturers shed 7,000 workers in November, building on the weak economic environment that we have seen since July. The industry has lost 26,000 workers on net in the past four months. Prior to that point, the manufacturing sector had added 172,000 employees in the months of January through July, or 16.3 percent of all of the nonfarm payroll jobs created in the first seven months of the year. It is clear that this outsized role in net job creation has come to a standstill since the summer.

Slower sales growth and uncertainties related to the U.S. economic climate have taken their toll on the manufacturing sector. The latest NAM/IndustryWeek Survey of Manufacturers released yesterday, reiterates this point. There has been a substantial deterioration in the percentage of manufacturers who say that their company’s business outlook is positive. More troublesome the survey showed that average expectations for capital spending and hiring over the next 12 months has turned negative for the first time since 2009. In fact, almost 43 percent of respondents said that they had reduced or slowed down their business investment, and more than 36 percent said that they have reduced employment or stopped hiring. (continue reading…)

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ADP: Manufacturing Employment Falls for the Fifth Straight Month

Automated Data Processing (ADP) reported that nonfarm payrolls rose 118,000 in November, lower than the 157,000 observed in October. Almost all of this increase stemmed from additional service sector workers, which increased by a net 114,000. Goods- producing firms hired just 4,000 net new employees in the month.

In the manufacturing sector, employment dropped by 16,000 workers. This was the fifth straight month of losses, according to ADP, totaling 60,000. This figure is larger than the official statistics from the Bureau of Labor Statistics (BLS), which reported declines of 27,000 in August and September with a gain of 13,000 in October. Nonetheless, it is an indication that the BLS results, when they are released on Friday for November, will be weak at best, and could be negative.

ADP said that the losses in the manufacturing workforce offset a healthy 23,000-worker increase in construction employment. The trade, transportation and utilities (up 22,000), professional business services (up 16,000), and financial activities (up 13,000) sectors also saw more hires in the month.

Breaking out the analysis by company size, larger businesses – particularly those with over 1,000 employees – added the most net new jobs, hiring an additional 62,000 workers. Small and medium-sized businesses hired 19,000 and 33,000 net new workers, respectively, in the month. This is a bit of a turnaround from prior months, when medium-sized (e.g., those with between 50 and 499 workers) led the net job gains.

In summary, the weaker employment numbers in November for manufacturing stemmed from two things. First, Hurricane Sandy reduced some activity, particularly in the Mid-Atlantic regions, and we have seen this storm have an impact in a number of economic statistics. But, the larger challenge right now is the uncertainty created by the fiscal cliff, with slowing global sales also playing a role. As Moody’s Analytics Chief Economist Mark Zandi, who produces this report for ADP, put it, “Businesses appear to be holding firm on their hiring and firing decisions.”

Chad Moutray is chief economist, National Association of Manufacturers.

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Denver Debate Keeps Focus Where It Should Be – On Jobs

Tonight’s debate opened with a focus on jobs. It was a good start and exactly where our focus needs to be.

Manufacturing means jobs. Manufacturing means secure, good-paying jobs that help drive our economy. Governor Romney laid out a strong jobs program built on the fundamental principles of a pro-growth agenda. He correctly noted that tax revenues for the government only go up when people have jobs that allow them to pay taxes in the first place. Sixty-six percent of manufacturers pay taxes at the individual rate, and a tax hike for these job creators will stop job creation in its tracks. Washington policies that include looming tax hikes have resulted in 55 percent of surveyed small businesses and manufacturers saying they would not start a business today. Allowing manufacturers to invest in their businesses and their workforce is the only true path to economic recovery.

Ensuring that the workforce has the proper training and skills is a consistent concern for manufacturers in the U.S. Despite an unemployment rate that has been above 8 percent for the past few years, we still have 600,000 jobs that remain open because manufacturers can’t find workers with the skills to match the jobs. President Obama’s focus on science, technology, engineering, and math (STEM) education opportunities is a critical aspect of creating the type of workforce that will drive the innovation that will maintain America’s place as the number-one manufacturing nation in the world.

But the spirit of the American dream, of people lifting themselves up through education, could take a backseat if the trend of picking winners and losers in business continues. The attempt to “villainize” energy producers in the U.S. was predictable, but it won’t get us any closer to the “all-of-the-above” energy policy that we sought after. Manufacturers, as consumers of one-third of our nation’s energy supply, need affordable and consistent energy resources to drive our economy. Governor Romney was absolutely right when he called for the approval of the Keystone XL pipeline. Keystone XL represented one of the single strongest opportunities for job creation in the past couple of years, and the discussion of energy policy returned the debate right back to where the focus needed to be on—jobs.

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ADP Reports Less Manufacturing Employment in May

The Automatic Data Processing (ADP) report released this morning found that 133,000 net new jobs were added to the economy in May. This is slightly higher than the revised increase of 119,000 in April. Almost all of these gains stemmed from the service sector. Mirroring past reports, all but 9,000 of the net increase came from small and medium-sized businesses (e.g., those with less than 500 employees).

Reflecting recent weaknesses, manufacturers shed 2,000 workers. This was the second consecutive decline, with a 6,000 worker decrease observed in March. Still, even with these losses, the year-to-date gain is 55,000. Note that ADP’s estimates are lower than the official data from BLS, with 167,000 net new jobs added to the sector in the past five months.

Tomorrow, the Bureau of Labor Statistics will release the latest government statistics on employment. Last month, manufacturers added 20,000 workers in April. I would expect the increase to be lower than in April, but we will have to see if BLS finds a decline as well.

Chad Moutray is chief economist, National Association of Manufacturers.

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BP to Create Thousands of Jobs with Refinery Modernization

Yesterday BP announced that it has reached a $400 million settlement with the Environmental Protection Agency (EPA), the Department of Justice and others that will allow the company to modernize its Whiting, Indiana refinery.  BP had been embroiled in multi-year negotiations for a permit for the project, the largest private-sector investment in Indiana history.  By finding a way to move forward, BP estimates it will be able to create 10,000 jobs just this year.

Ross Eisenberg is vice president of energy and resources policy, National Association of Manufacturers.

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Manufacturers Returning Jobs from Overseas

Today’s Wall Street Journal article, “Once Made in China: Jobs Trickle Back to U.S. Plants”, detailed the growing “reshoring” trend in manufacturing as more and more companies are deciding to bring facilitates and jobs back from overseas. This trend is another indicator of the positive manufacturing activity we’ve seen over the past several months.

The article highlighted several manufacturers that have collectively created a few thousand positions here in the U.S. as a result of returning certain work.

“U.S. manufacturing has become attractive for some companies as Asian wages have surged over recent years and the wage gap between the U.S. and China has narrowed. The drop in the dollar over the past decade has also made U.S.-produced goods more competitive. And higher oil prices have increased the cost of shipping goods across oceans, making domestic manufacturing more appealing.”

Even with these positive indicators, manufacturers are still finding that it is 20 percent more expensive to do business in the U.S. compared to our major trading partners. Companies are deciding on a case-by-case basis where it makes more financial sense for them to manufacture.

Manufacturers have added 167,000 net new jobs over just the past five months and 489,000 since January 2010. But we must do more. We need polices to help level the playing field to enable manufacturers to export more. We need a predictable and consistent tax code, an “all of the above” energy strategy, and a highly skilled workforce. These are just some policy changes that will help keep manufacturers in the U.S competitive, allowing them to grow and create new jobs.

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Alcoa Groundbreaking of New Aluminum Lithium Facility

Today Alcoa celebrated the groundbreaking of construction for its new $90 million aluminum lithium facility in Lafayette, IN. Alcoa is the world’s leading producer of primary and fabricated aluminum.

The new state-of-the-art facility will be an 115,000 square foot expansion capable of producing more than 20,000 metric tons of aluminum lithium. The new facility will create approximately 75 high-value jobs, with an additional 150 jobs created during the construction.

Alcoa’s decision to invest in a new facility is a perfect example of how manufacturers are leading innovation here in the United States. Manufacturers are driving our economic recovery and it’s great to see manufacturers continue to expand and create new jobs.

What manufacturers need now is more pro-growth policies from Washington that will allow companies to invest in new facilities such as this and employ more workers.  We need more stories like today’s groundbreaking of Alcoa’s new facility. Such projects will ensure that the U.S. remains competitive in the global manufacturing economy.

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