Manufacturers Added 12,000 Workers in April, with Nonfarm Payroll Growth of 288,000

By May 2, 2014General

The Bureau of Labor Statistics said that U.S. employment growth was faster than anticipated in April, with nonfarm payrolls rising by 288,000. The consensus expectation had been for around 220,000 additional workers added in the month, essentially the estimate provided by ADP two days ago. In addition, the February and March data were both revised upward, adding another 36,000 to the total. With this new data, nonfarm payrolls have increased by 214,250 on average each month so far in 2014, up from the 194,250 average of 2013.

The unemployment rate fell from 6.7 percent in March to 6.3 percent in April, its lowest point since September 2008. Still, this news was largely the result of a significant drop in the size of the labor force (down from 156.23 million to 155.42 million) and a decline once again in the labor force participation rate (down from 63.2 percent to 62.8 percent). The participation rate has returned to where it was in December, which was the smallest rate since February 1978.

Meanwhile, manufacturers added 12,000 net new workers in the month of April. Revisions also added 8,000 to the totals for February and March. Since August, the manufacturing sector has hired just over 13,000 on average each month, a sign that the pickup in production and demand has led to more jobs.

Looking specifically at the various manufacturing sectors in April, durable goods industries generated 11,000 new workers, with nondurable goods firms adding another 1,000. The strongest growth was seen in the motor vehicles and parts (up 5,200), machinery (up 4,200), fabricated metal products (up 3,800), wood products (up 2,000), and nonmetallic mineral products (up 1,800) sectors. Sectors with declining employment for the month included miscellaneous durable goods (down 2,600), computer and electronic products (down 2,400), food manufacturing (down 1,900), apparel (down 800), and petroleum and coal products (down 700).

Despite the higher employment numbers, average weekly hours and compensation in manufacturing were both slightly lower. The average number of weekly hours for manufacturers edged down from 41.0 hours to 40.8 hours, with overtime hours unchanged at an average of 3.5 hours.  At the same time, average weekly earnings declined from $1,014.75 in March to $1,007.76 in April. In each case, this brought the data back to essentially where it was in February, with a long-term trend that remained positive.

Overall, the employment data were a mixed bag. The headline number was strong, with healthy gains in nonfarm payroll growth and a sharp decline in the unemployment rate. Manufacturers have also continued to add more workers at a decent pace since August 2013, with accelerated activity leading to more hiring. Yet, the data also show that the participation rate remains at a 30-year low, and manufacturing hours and compensation were somewhat down for the month.

So, while manufacturers remain mostly upbeat about this year (including additional hiring), this report – particularly when combined with Wednesday’s  very weak GDP numbers – show that there are some nagging challenges in the labor market and the overall economy. This tends to dampen enthusiasm and add to manufacturers’ anxieties.

Additionally, manufacturers continue to face numerous impediments to growth herein the United States, such as having highest marginal tax rates in the world, rising health care costs, an overly aggressive EPA and NRLB, aging and crumbling infrastructure, and an anti-competitive  tort system, just to name a few. In fact, 79.0% of respondents cited unfavorable business climate due to taxes, regulations and government uncertainties as their top business challenge in the most recent NAM/IndustryWeek Survey of Manufacturers.

It’s a long list. But to be clear—for America to maintain our mantle of economic leadership, we need policies at the federal level that help manufacturers seize the opportunities before us, not  policies that hold us back.

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

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM) and the Director of the Center for Manufacturing Research for The Manufacturing Institute, where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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