The Bureau of Labor Statistics reported that manufacturing ran up the score for the second straight month in January began the new year on an encouraging note. The sector added 5,000 workers in January, building on a gain of 11,000 workers in December.
We hope this is a sign that manufacturers are starting to accelerate their hiring in light of a stronger demand and production outlook. Today’s report stands in contrast to the numbers throughout much of 2016. Last year, manufacturers were taking a more cautious approach, and as a result there are 46,000 fewer manufacturing workers today than one year ago, as global headwinds and economic uncertainties continued to take their toll on manufacturing activity.
Average weekly earnings in manufacturing also moved higher, up from $1,072.04 in December to $1,075.49 in January. On a year-over-year basis, average weekly earnings have increased from $1,042.33 in January 2016, up 3.2 percent for the 12-month period. Average weekly hours edged up from 40.7 to 40.8, average overtime hours edged down from 3.3 to 3.2.
If we want to keep winning, it will take more than just optimism and confidence. We need to see economic reforms—infrastructure investments, tax reform and regulatory reform. In the global economy, manufacturers are not competing on a level playing field. Other countries have distinct advantages—from better infrastructure to lower tax rates.
When our elected leaders refuse to act on these issues and others, they are making it easier for our foreign competitors. You could say it’s like letting them play with a deflated football.
But back to the BLS report: In the larger economy, nonfarm payrolls increased by 227,000 in January, which was better than the consensus estimate of around 175,000. It was the strongest monthly gain since September, with the latest figure representing a pickup from the 186,833 monthly average in 2016. Meanwhile, the unemployment rate inched up from 4.7 percent in December to 4.8 percent in January. The increase stemmed largely from a higher participation rate, which ticked up from 62.7 percent to 62.9 percent. That suggests that more Americans are seeking employment—another signal of possible renewed health in the U.S. economy.
More encouraging jobs growth should put additional pressure on the Federal Reserve as it weighs the timing of its next move. While the Federal Open Market Committee chose not to raise short-term rates at its most recent meeting earlier this week, it will likely take a hard look at doing so at its March 14–15 meeting, especially if economic data continue to reflect building strength in output and employment and if pricing pressures continue to pick up (albeit at still acceptable levels for now).
Digging deeper into the latest release, durable goods firms added 6,000 workers in January; however, there were 1,000 fewer workers employed among nondurable goods manufacturers. The largest gains for the month were in food manufacturing (up 3,300), motor vehicles and parts (up 3,300), furniture and related products (up 2,400), nonmetallic mineral products (up 2,200) and machinery (up 2,000). In contrast, there were fewer employees in January in the following segments: computer and electronic products (down 2,800), fabricated metal products (down 2,200), apparel (down 2,000), printing and related support activities (down 1,600) and miscellaneous nondurable goods manufacturing (down 1,400), among others.