The Bureau of Labor Statistics reported that manufacturers added 36,000 workers in June, the industry’s fastest pace of job growth since December. More importantly, it was the ninth consecutive month with robust hiring growth in the sector, with an average 27,111 jobs added per month over that time frame. As such, the latest jobs numbers confirm that the labor market has tightened significantly. Since the end of the Great Recession, manufacturing employment has risen by 1,260,000 workers, with 12,713,000 employees in the sector in this report. That is the highest level of manufacturing employment since December 2008.
Today’s report is more proof that the economy is still roaring following pro-growth tax and regulatory reform. Manufacturers have now added 155,000 total jobs in just the six months since tax reform was enacted—a marked increase in the pace of job creation compared to previous years. To keep this robust growth going long-term, manufacturers need certainty, and that will depend heavily on having sound trade policy and making temporary portions of the new tax code permanent. These numbers also help to cement more Federal Reserve rate action, largely based on improvements in the overall economy and labor market, with two more federal funds rate hikes expected in 2018.
Meanwhile, nonfarm payrolls rose at a healthy pace, up 213,000 in June, extending the gain of 244,000 seen in May and better than the consensus estimate of around 185,000. In addition, the unemployment rate ticked up from 3.8 percent in May, its lowest level since April 2000, to 4.0 percent in June. The higher unemployment rate, though, was largely a function of an increased participation rate, up from 62.7 percent to 62.9 percent. This suggests that more Americans are entering the labor market, which is encouraging. In a similar way, the so-called “real” unemployment rate, which includes discouraged, other “marginally attached” workers, edged up from 7.6 percent to 7.8 percent.
Turning to income growth, average weekly earnings for production and nonsupervisory employees in the manufacturing sector rose from $899.64 in May to $902.16 in June. That translated into a modest 3.0 percent increase over the past 12 months, up from $875.70 in June 2017.
In June, durable and nondurable goods manufacturers added 32,000 and 4,000 employees, respectively. The largest increases were in the transportation equipment (up 12,500, including 12,000 from motor vehicles and parts), fabricated metal products (up 7,100), computer and electronic products (up 5,100), food manufacturing (up 4,400), machinery (up 4,400), primary metals (up 2,900) and chemicals (up 1,900) segments. In contrast, there was declining employment in several segments in June, including apparel (down 1,800), miscellaneous nondurable goods (down 1,300), furniture and related products (down 800), miscellaneous durable goods (down 800), printing and related support activities (down 700) and textile product mills (down 300).