“…and manufacturing capacity utilization jumped to a reading not seen since April 2008.”
The Federal Reserve said that manufacturing production was unchanged in January for the second straight month. As such, output in the sector essentially has taken a pause at the beginning of 2018, but we would anticipate that breather to be short-lived. Indeed, we would expect manufacturing production to rise by 2.1 percent in 2018, up from 1.7 percent in 2017. In terms of the latest data, manufacturing production rose by 1.8 percent since January 2017, slowing from the more robust 2.3 percent pace seen in November, which likely represented a rebound in the aftermath of several hurricanes. Much like the headline number, manufacturing capacity utilization was flat in January’s report, unchanged at 76.2 percent. Read More
The Bureau of Labor Statistics reported that manufacturing labor productivity rebounded strongly in the fourth quarter, up 5.7 percent at the annual rate. The third quarter figures were pulled lower by hurricane-related weaknesses, with labor productivity and output down 4.9 percent and 1.6 percent in that report, respectively. In contrast, output soared 7.3 percent in the fourth quarter, reflecting both a recovery from the hurricanes and stronger economic growth. Hours worked in the sector rose by 1.5 percent in the fourth quarter, with unit labor costs off by 3.7 percent. The sectoral breakdowns were also encouraging, with labor productivity for durable and nondurable goods firms up 6.7 percent and 4.5 percent, respectively.
For the year, manufacturing labor productivity increased 0.7 percent, with output and unit labor costs up 1.7 percent and 0.9 percent in 2017, respectively. The annual figure for manufacturing labor productivity growth was slightly better than the average seen from 2013 to 2017, which was just 0.4 percent. Indeed, sluggish productivity growth continues to be one of the larger frustrations in the U.S. economy in the aftermath of the Great Recession. In comparison, the average growth rate for manufacturing labor productivity was 3.9 percent in both the 1990-2000 and 2002-2008 time frames, or the two prior economic recoveries. Read More
The Bureau of Labor Statistics reported that manufacturing labor productivity plummeted by 4.4 percent at the annual rate in the third quarter, its first decrease in one year and the largest quarterly decline since the Great Recession. On the positive side, it was originally estimated to be a decline of 5.0 percent, with the latest revision lessening the decrease somewhat from what was originally thought. Overall, though, the data continue to reflect the damage from recent hurricanes, with output down by 1.1 percent in the manufacturing sector. At the same time, hours worked and unit labor costs in manufacturing rose by 3.5 percent and 4.8 percent, respectively. The sectoral breakdowns were similar, with labor productivity for durable and nondurable goods firms off by 4.7 percent and 4.4 percent, respectively. Read More
The Bureau of Labor Statistics reported that manufacturing labor productivity plummeted by 5.0 percent at the annual rate in the third quarter, its first decrease in one year and the largest quarterly decline since the Great Recession. This was likely the result of reduced activity stemming from recent hurricanes, with output down by 2.1 percent in the sector. At the same time, hours worked and unit labor costs in manufacturing rose by 3.1 percent and 6.2 percent, respectively. The sectoral breakdowns were similar, with labor productivity for durable and nondurable goods firms off by 5.7 percent and 4.6 percent, respectively. It is hard to paint these data in a positive light, except to say that they are likely transitory, and we would expect a rebound in output and productivity in forthcoming data. With that said, manufacturing labor productivity has been virtually unchanged for five straight years, continuing a discouraging trend that we hope to reverse moving forward.
There was more encouraging news in the larger economy. Nonfarm labor productivity increased by an annualized 3.0 percent in the third quarter, its fastest quarterly growth rate in three years and up from a 1.5 percent gain in the second quarter. Output and hours worked rose by 3.8 percent and 0.8 percent, respectively, with unit labor costs up by 0.5 percent. Similar to the manufacturing data described above, nonfarm labor productivity has slowed considerably since the Great Recession, averaging 0.5 percent per year from 2011 to 2016. With the latest increase, nonfarm labor productivity has risen by 1.6 percent year-over-year, which was an improvement from recent trends, even as it remains lower than the 2.7 percent annual growth rate average seen from 2000 to 2007.
The Bureau of Labor Statistics reported that manufacturing labor productivity rose 0.4 percent in the first quarter of 2017, slower than the 2.0 percent gain in the fourth quarter of 2016. Nonetheless, it was the second straight quarterly increase in productivity in the sector, with fourth quarter activity rebounding from declines in each of the two prior quarters. In this release, output per worker in manufacturing increased 2.8 percent, its fastest quarterly rate since the second quarter of 2014. Unit labor costs increased 2.1 percent. There were large sectoral differences in the data, with labor productivity for durable goods firms down 1.1 percent in the first quarter but up 3.2 percent for nondurable goods manufacturers. As a result, unit labor costs rose 2.5 percent and 1.3 percent for durable and nondurable goods businesses in the quarter, respectively. Read More
The Federal Reserve said that manufacturing production edged down slightly in November, off 0.1 percent, after experiencing gains in both September and October. Manufacturers have struggled to increase demand over the past couple years, with a strong dollar and global headwinds dampening overall activity, but recent sentiment surveys – including the most recent one from the NAM – have reflected a rebound in activity. In that light, the latest production data serve as a disappointment, continuing to highlight ongoing struggles for the sector, even as other segments have seen progress. Along those lines, manufacturing production has risen just 0.1 percent on a year-over-year basis, suggesting essentially stagnant growth over the past 12 months. Manufacturing capacity utilization was also lower for the month, down from 74.9 percent to 74.8 percent. That was off from the 75.3 percent rate observed one year ago. Read More
According to the Federal Reserve, manufacturing production fell by 0.4 percent in August. After two straight months of gains, this news was disappointing, even as it mirrored weaknesses found in other economic indicators in August. Moreover, manufacturing production has declined over the past 12 months, the first year-over-year decline since December. In addition, manufacturing capacity utilization decreased from 75.2 percent to 74.8 percent, a three-month low. As such, this report highlights the tremendous challenges in the sector. Nonetheless, manufacturers continue to be cautiously hopeful for increased activity over the coming months, as noted in our latest survey.
The current softness, though, means that policymakers need to focus more on priorities that will grow the economy and increase competitiveness. It also suggests that the Federal Reserve is likely to wait to raise rates. Along those lines, 45.5 percent of respondents to our survey felt that the Federal Open Market Committee would hike rates in December.