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Chad Moutray

Don’t Panic About The February Jobs Report. Manufacturing Still Has 428,000 Open Jobs To Fill.

By | Shopfloor Main, Shopfloor Policy | No Comments

Manufacturers added just 4,000 workers in February, the industry’s slowest monthly pace of job growth since July 2017 and pulling back from a gain of 21,000 jobs in January. The overall nonfarm payroll data were also disappointing, from a solid increase of 311,000 in January to 20,000 in February. Weather might have negatively impacted employment growth in the month, and economists were largely expecting a pullback after the strong figure in January (especially in the aftermath of the partial government shutdown). The consensus estimate was for around 180,000 jobs created, though, not the 20,000 the Bureau of Labor Statistics reported. I would not be surprised to see an upward revision in the next release or, at a minimum, a sharp rebound.

With that in mind, it is important to not read too much into these data, as the labor market continues to be strong overall. The U.S. economy has generated a robust 209,080 jobs, on average, each month over the past 12 months, with manufacturers hiring more than 20,000 workers per month, on average, since February 2017. In addition, the unemployment rate dropped from 4.0 percent in January to 3.8 percent in February, continuing to be near 50-year lows. In addition, the so-called “real unemployment rate” declined from 8.1 percent to 7.3 percent in this report, a rate not seen since March 2001. There were 12,834,000 manufacturing workers in February—the most workers in the sector since December 2008—with almost 1.4 million employees added since the end of the Great Recession.

Manufacturers are experiencing a tight labor market that is not expected to go away anytime soon, as businesses face concerns about finding the skilled workers they’ll need to continue growing. In the most recent NAM Manufacturers’ Outlook Survey (released earlier this week), 9 in 10 manufacturers expressed a positive outlook for their business—hitting nine consecutive quarters of record optimism—but the inability to attract and retain workers continues to be the top concern for the sixth consecutive quarter. There are nearly half a million available manufacturing jobs in the United States.

And according to a study from Deloitte and The Manufacturing Institute—the education and workforce partner of the NAM—manufacturers will need to fill 4.6 million jobs over the next decade. That’s why the NAM is working hard, in conjunction with the Trump administration through its American Workforce Policy Advisory Board, to develop cutting-edge solutions to address this workforce shortage. Our country’s continuing economic prosperity will depend on developing the tomorrow’s workforce today, and manufacturers are committed to leading the way toward that end.

GDP Grows at Fastest Rate Since 2014, with Tax Reform Powering Manufacturers Forward

By | Economy, Shopfloor Economics, Shopfloor Main | No Comments

The Bureau of Economic Analysis said that the U.S. economy grew by an annualized 4.1 percent in the second quarter of 2018, the best reading since the third quarter of 2014 and up from 2.2 percent growth in the first quarter. Robust growth in consumer and business spending and exports boosted the data. Since the end of the Great Recession, the U.S. economy has expanded 2.2 percent on average. Moving forward, real GDP should grow by roughly 3 percent in 2018, which would be the strongest growth rate since 2005.

Indeed, over the past six months, tax reform and regulatory relief have sparked the robust manufacturing job growth manufacturers predicted. The business optimism of our member companies stands at a record high, and 86 percent of them plan to invest in new plants and equipment, 77 percent plan to increase hiring, and 72 percent plan to increase wages and benefits for workers. That is driving the robust growth we are now seeing reflected in today’s report, placing an urgent need to grow and upskill the manufacturing workforce. Read More

Manufacturing Production Rebounded Strongly in June

By | Economy, Shopfloor Economics, Shopfloor Main | No Comments

The Federal Reserve reported that manufacturing production rebounded strongly in June after pulling back in May due to a fire at an auto supplier. Output in the sector increased 0.8 percent in June after falling 1.0 percent in May. So far in 2018, manufacturing production has seesawed from month to month, but up 1.0 percent over that time frame. Over the past 12 months, production in the sector has risen a respectable 1.9 percent, up from 1.7 percent in the previous release. My forecast for 2018 is for manufacturing production to increase 2.2 percent, which would indicate an uptick in output in the second half of this year. Similarly, manufacturing capacity utilization rose from 75.0 percent in May to 75.5 percent in June, which remains not far from April’s rate (75.8 percent), which was the best reading since August 2015.

In June, durable and nondurable goods manufacturing increased 1.6 percent and 0.1 percent, respectively. The largest increase came from motor vehicles and parts, which soared by 7.8 percent in June after dropping by 8.6 percent in May. Beyond automotive, other manufacturing sectors with increased production for the month included computer and electronic products (up 1.5 percent), wood products (up 1.2 percent), aerospace and miscellaneous transportation equipment (up 1.0 percent), fabricated metal products (up 0.9 percent), textile and product mills (up 0.9 percent), machinery (up 0.7 percent) and petroleum and coal products (up 0.6 percent), among others.

In contrast, output declined for apparel and leather (down 3.1 percent), nonmetallic mineral products (down 1.1 percent), furniture and related products (down 0.5 percent), miscellaneous durable goods (down 0.5 percent), plastics and rubber products (down 0.3 percent) and food, beverage and tobacco products (down 0.2 percent).

Meanwhile, total industrial production also recovered in June, up 0.6 percent after declining 0.5 percent in May. Mining output increased 1.2 percent in June, but utilities production fell 1.5 percent. Over the past 12 months, industrial production has risen 3.8 percent, up from 3.2 percent in the prior release and the fastest year-over-year pace since July 2014. Mining and utilities have grown 12.9 percent and 5.0 percent year-over-year, respectively. In addition, capacity utilization ticked up from 77.7 percent to 78.0 percent. That was just shy of the 78.2 percent reading in April, which was the best rate since February 2015.

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