Manufacturing Employment Was Solid in 2017 on Improvements in the Economic Outlook

The Bureau of Labor Statistics said that manufacturers added 25,000 workers in December, extending the strong hiring gains in the sector seen throughout much of 2017. Manufacturing employment rose by 16,333 per month on average in 2017—quite a turnaround from the loss of 16,000 workers experienced in 2016. This is a sign that firms have stepped up their hiring as a result of a stronger economic outlook and increased demand and production activity.

Beyond improvements in the global economy and overall activity, manufacturing optimism has risen to all-time highs largely on a pro-business environment, including passage of comprehensive tax reform. Moving forward, manufacturers expect policymakers to move on to other initiatives, such as infrastructure, to keep the momentum going.

Since the end of the Great Recession, manufacturing employment has risen by 1,086,000 workers, with 12.54 million employees in the sector in this report. That is the highest level of manufacturing employment since January 2009. Moreover, we continue to hear from manufacturers that the inability to attract and retain a quality workforce is one of their top concerns, which is further proof that the labor market has tightened considerably. Average weekly earnings for manufacturing workers edged down from $1,092.44 in November to $1,090.99 in December. That translated into 1.8 percent growth over the past 12 months.

Overall, manufacturing was one of the bright spots in the latest jobs report, with nonfarm payrolls up just 148,000 in December. That was below the consensus estimate of 200,000, and the headline number was pulled lower by softness in other components, especially retail trade (down 20,300). Nonetheless, the labor market remains strong overall, with nonfarm payroll employment averaging 171,250 per month in 2017. That is a decent pace, even with some easing from the average rate of 186,667 in 2016. The unemployment rate was unchanged at 4.1 percent for the third straight month, continuing to be its lowest level since December 2000.

In December, durable and nondurable goods employment rose by 21,000 and 4,000 workers, respectively. The largest increases were in the machinery (up 6,000), fabricated metal products (up 5,400), food manufacturing (up 4,500), computer and electronic products (up 3,000), primary metals (up 2,600), chemicals (up 1,900), nonmetallic mineral products (up 1,700) and motor vehicles and parts (up 1,300), among others. In contrast, there was declining employment in December in the petroleum and coal products (down 1,900), paper and paper products (down 1,200), printing and related support activities (down 1,100), apparel (down 700) and furniture and related products (down 700) segments.

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

Leave a Reply