nondurable goods Archives - Shopfloor

Manufacturing Added Less to Real GDP in the First Quarter Than in the Prior Two Quarters

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As noted earlier, the U.S. economy grew by an annualized 1.1 percent in the first quarter, and the Bureau of Economic Analysis has now released data breaking out that growth by industry. In short, real value-added output in the manufacturing sector increased by 1.4 percent in the first quarter of 2016, slowing from 2.6 percent and 2.4 percent growth in the third and fourth quarters of 2015, respectively. As a result, manufacturers contributed 0.16 percentage points to headline growth in the first quarter, down from 0.31 percent and 0.29 percent in the prior two quarters.

Looking specifically at manufacturing in the first quarter, real value-added from nondurable goods firms rose 3.8 percent at the annual rate, but durable goods manufacturers saw output decline by 0.6 percent. Therefore, durable and nondurable goods businesses contributed -0.04 percent and 0.2 percent, respectively, to real GDP for the quarter. Read More

Factory Orders Fell 0.2 Percent in November

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The Census Bureau said that new factory orders declined by 0.2 percent in November, falling for the third time in the past four months. As such, this report was somewhat disappointing, particularly following the 1.3 percent increase observed in October. New manufactured goods orders decreased from $473.1 billion in October to $472.2 billion in November. On a year-over-year basis, new orders have declined by 4.2 percent, down from $493.0 billion in November 2014. This speaks to the multitude of headwinds hitting the manufacturing sector lately, ranging from currency challenges to reduced commodity prices to sluggish economic growth worldwide.

With durable goods sales unchanged for the month, as noted in preliminary data released earlier, orders for nondurable goods were off 0.4 percent in November. With that said, durable goods orders would have been weaker if transportation equipment data were excluded, mainly because of a large decline in nondefense aircraft demand. These numbers can be quite volatile from month-to-month, where sales are often batched together around key events, such as air shows. Excluding transportation, new factory orders were down 0.3 percent. This speaks to broader weaknesses beyond transportation – something that can be better seen in the year-over-year figures. New factory orders excluding transportation have decreased from $416.8 billion in November 2014 to $390.4 billion in this release, off 6.3 percent.
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Manufacturing Productivity Jumped Strongly in the Third Quarter

By | General, Shopfloor Economics | No Comments

The Bureau of Labor Statistics said that manufacturing labor productivity jumped 4.9 percent in the third quarter, up from 2.1 percent in the second quarter. It was the fastest quarterly increase in four years, and mostly reflected a modest increase in output (up 2.7 percent) combined with a decline in the number of hours worked (down 2.1 percent). Despite the significant increase in output per hour for all persons working, the decrease in hours worked resulted in a 5.9 percent jump in hourly compensation, and therefore, unit labor costs rose 0.9 percent. In general, we want unit labor costs to fall, as the improvements in efficiency help to make manufacturers more competitive globally. Read More

Factory Orders Rose in June on Strong Aircraft Sales Growth

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The Census Bureau said that new factory orders rose 1.8 percent in June, rebounding from declines in both April and May. Indeed, manufacturers’ new orders have decreased in 9 of the past 11 months, with a number of economic headwinds dampening overall demand. On a year-over-year basis, new orders have declined from $510.1 billion in June 2014 to $478.5 billion in this release, or a decrease of 6.2 percent. In June, the gain stemmed largely from strong aircraft sales growth, with transportation equipment sales up 9.3 percent following declines of 4.0 percent and 6.3 percent in April and May, respectively. Aircraft orders can be volatile from month to month, with sales often batched together around large trade shows, and this latest report reflects numbers from the Paris Air Show. If you were to exclude transportation, new factory orders would have risen by a more modest 0.5 percent. Read More

BLS: Manufacturers Have Added Roughly 18,800 Workers per Month Since 2013

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The Bureau of Labor Statistics said that manufacturers added 22,000 net new workers in January, extending the 26,000 gain observed in December. These data included rather large upward revisions for previous months, and since December 2013, manufacturers have added roughly 18,800 workers per month on average. As such, the manufacturing sector has been making relatively strong gains on the hiring front, with an average of 29,000 over the past four months (October through January). This suggests that momentum in demand and production at the end of 2014 has warranted healthy growth in employment, which is encouraging. Looking at a longer time horizon, manufacturers have added 855,000 workers since 2009. Read More

Manufacturing Productivity Slowed in the Fourth Quarter

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The Bureau of Labor Statistics said that productivity in the manufacturing sector increased 1.3 percent in the fourth quarter, its slowest pace of 2014. For the year as a whole, labor productivity in the sector rose 2.5 percent, up from 1.0 percent in 2012 and 2.0 percent in 2013. The increase in annual labor productivity in 2014 stemmed from better output data, which grew by 3.9 percent for the year. Indeed, output was stronger in the fourth quarter, as well, up 5.7 percent versus 4.8 percent in the third quarter. In the fourth quarter, unit labor costs edged slightly higher, up 0.2 percent, on higher real compensation costs. Read More

Factory Orders Fell for the Fifth Straight Month in December

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The Census Bureau said that new factory orders fell 3.4 percent in December, extending the 1.7 percent decrease observed in November. It was the fifth straight monthly decline. This disappointing report was foreshadowed by the preliminary durable goods release, which stated that sales had declined in four of the past five months. As such, these data show that manufacturing activity ended 2014 on a weak note, with sluggish global growth dampening demand in the United States. To illustrate the slowness of recent data, manufactured goods orders averaged $498.81 billion per month in 2014 as a whole, but December’s level was just $471.45 billion. On a more encouraging note, the average for new factory orders in 2014 was 2.8 percent higher than the $485.4 billion monthly average seen in 2013. Read More

Manufacturing Productivity Rose 3.2 Percent in the Third Quarter

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The Bureau of Labor Statistics said that productivity in the manufacturing sector rose 3.2 percent in the third quarter. Manufacturing labor productivity has exceeded 3 percent in each of the three quarters so far in 2014, which represents a nice bump-up from the 1.0 percent and 2.0 percent annual increases seen in 2012 and 2013, respectively.

Despite these solid figures, output measures for the sector have been more volatile, up just 1.6 percent in the soft first quarter and then rebounding with a 7.1 percent increase in the second quarter. In these latest third quarter numbers, manufacturing output rose a solid 4.1 percent, helping to push unit labor costs down 0.7 percent. Lower unit labor costs help to make the sector more competitive globally. Indeed, unit labor costs for the manufacturing sector have fallen 5.4 percent since the end of the Great Recession, with even steeper declines in the manufacturing sector. Read More

New Factory Orders Jumped Strongly in July on Aircraft Sales, but Declined Otherwise

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The Census Bureau said that new factory orders jumped 10.5 percent in July. With that said, much of that increase stemmed from nondefense aircraft orders (up from $16.8 billion in June to $70.3 billion in July), as noted in the previous release of preliminary durable goods sales figures. Commercial airplane orders are choppy, with sales usually announced in batches. Motor vehicle sales were also stronger in July, up 7.3 percent.

Excluding transportation, new factory orders declined 0.8 percent, suggesting softness in the broader market. Durable goods orders excluding transportation fell 0.7 percent, with nondurable goods sales off 0.9 percent. Despite the decline in July, demand has largely been higher since January’s winter-related decreases, and new manufacturing orders excluding transportation have risen 2.7 percent over the past six months. As such, hopefully, the July numbers are just a pause in an otherwise positive trend year-to-date.

Looking specifically at new durable goods orders in July, the data were mostly lower. This included electrical equipment and appliances (down 4.8 percent), computers and electronic products (down 1.7 percent), furniture and related products (down 1.2 percent), machinery (down 1.2 percent) and primary metals (down 0.3 percent). Outside of transportation, the only other major sector with higher sales in July was fabricated metal products, up 0.1 percent.

Meanwhile, shipments of manufactured goods increased 1.2 percent, rising for the second straight month. Since January, shipments have increased 3.7 percent, illustrating the rebound seen over the past six months after weaknesses earlier in the year. Durable goods shipments rose 3.5 percent (or 1.5 percent excluding transportation); whereas, nondurable goods shipments fell 0.9 percent.

The largest increases were in transportation equipment (up 8.1 percent), machinery (up 3.0 percent), computers and electronic products (up 2.4 percent), nonmetallic mineral products (up 1.6 percent), textile mills (up 1.6 percent) and primary metals (up 1.4 percent). In contrast, shipments of petroleum and coal products (down 3.2 percent), textile products (down 2.1 percent) and chemical products (down 1.0 percent) declined in July.

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