Manufacturers added 9,000 net new workers in December, according to the Bureau of Labor Statistics. This was below the much-stronger hiring gains observed in October and November (17,000 and 31,000, respectively), but the average over the past five months suggests that employment has begun to pick up more recently, albeit at a pace that remains modest at best. From August to December, manufacturers hired an additional 16,000 net new employees on average each month. In contrast, the average over the prior five months (March to July) was a net decline of 8,000 per month.
Looking at the entire year, manufacturers added 77,000 net new workers over the course of 2013. This was the slowest pace of hiring growth since 2009. Manufacturing sector employment rose by 109,000 in 2010, with 207,000 and 154,000 more workers added in 2011 and 2012, respectively. As such, manufacturers have added 557,000 more jobs since December 2009.
In December, both durable and nondurable goods firms added workers on net, up 6,000 and 3,000, respectively, from November. The largest monthly gains were in the following sectors: food manufacturing (up 5,300), fabricated metal products (up 5,000), transportation equipment (up 3,800), primary metals (up 3,500), petroleum and coal products (up 1,600), and plastics and rubber products (up 1,600).
Some notable sectors with declining employment for the month included computer and electronic products (down 2,400), printing and related support activities (down 2,200), chemicals (down 1,800), nonmetallic mineral products (down 1,500), and furniture and related products (down 1,200).
On the hours and compensation front, the data were mixed for manufacturers. There was some slight easing in the number of average number of hours worked per week (down from 41.5 to 41.3) and in average weekly earnings (down from $1,078.17 to $1,075.04) for durable goods firms. At the same time, similar data were a bit higher for nondurable goods manufacturers, with average weekly hours (up from 40.2 to 40.3) and average weekly earnings (up from $891.64 to $895.87) higher. Note that the longer-term trend for manufacturers on the labor front has been a positive one for both of these indicators.
Meanwhile, much of the attention in this month’s jobs numbers has been on the weak nonfarm payroll growth. The overall economy added just 74,000 nonfarm payroll workers in December – a figure that was well below the consensus estimate of around 200,000. There is some suspicion that colder weather might have had an impact on this data. The average monthly gain in nonfarm payrolls for 2013 was 182,167. This was nearly identical to the averages seen in 2011 and 2012, which were 175,000 and 183,000, respectively. Nonetheless, the average from August to November had jumped to 214,000, providing some optimism for stronger numbers in December, which did not materialize.
The other shocking development in this report was the drop in the unemployment rate from 7.0 percent in November to 6.7 percent in December. This was the lowest rate since November 2008. Yet, it corresponds with another drop in the participation rate, down from 63.0 percent to 62.8 percent, its lowest level since February 1978. Those individuals who were “marginally attached to the labor force” rose by 331,000, including 155,000 additional “discouraged workers.”
In conclusion, the December employment data show that we continue to have persistent weaknesses in the labor market despite recent progress. Weather might have been a factor, but overall, the jobs market data were disappointing. For manufacturers, the positive news was that the sector has added 16,000 additional workers over the course of the past five months, and yet, this news is somewhat tempered by the reality that 2013 was the weakest year of hiring growth in the sector since 2009.
With that said, we remain cautiously optimistic about modest gains in employment for 2014. To ensure that the gains in employment that we have seen in the second half of 2013 continue in the new year, policymakers should adopt pro-growth measures that will allow the sector to expand and flourish, allowing them to hire more workers.
Chad Moutray is the chief economist, National Association of Manufacturers.