American domestic manufacturing employment fell by 10,000 on month in May, and this third monthly sequential jobs loss in the last four along with slightly negative revisions extended an employment recession that entered its 17th month. Largely as a result, May’s year-on-year manufacturing job loss (39,000) was the sector’s worst since August, 2010 (73,000), and industry’s share of total U.S. employment stayed stuck at a record low 8.54 percent.
Contrasting with these jobs woes was manufacturing’s wage performance. Current dollar hourly pay rose sequentially in May for the eleventh straight month – the longest such streak since 2006, such records began to be kept. In fact, these wage increases helped manufacturing extend a recent trend of outperforming the private sector, after lagging on the paycheck front for most of the current recovery. And the year-on-year real manufacturing wage increase (3.30 percent) was the biggest in pre-inflation terms since September, 2009 (3.91 percent).
Here’s my analysis of the latest monthly (May) manufacturing figures contained in this morning’s employment report from the Bureau of Labor Statistics:
>American domestic manufacturing shed jobs in May sequentially for the third time in the last four months. The 10,000 payroll reduction combined with slightly negative revisions to drag the sector into the seventeenth month of its longest jobs recession since the Great Recession.
>According to the preliminary May figures, manufacturing employment is down on net (by 9,000 jobs) since December, 2014.
>May’s poor results also produced manufacturing’s worst year-on-year job loss (39,000) since August, 2010’s 73,000, and helped keep industry’s share of total non-farm employment at an all-time low of 8.54 percent.
>Between the previous two Mays, manufacturing gained 178,000 net new jobs.
>Manufacturing jobs are now down on an annual basis for four straight months – also the worst such stretch since 2010.
>Yet while manufacturing payrolls have been sagging, paychecks have kept surging. Pre-inflation manufacturing wages rose on month by 0.31 percent in May. This pace was slower than April’s downwardly revised 0.66 percent, helped industry extend its string of month-to-month pay hikes to eleven – the longest since 2006, when these figures began to be kept.
>In addition, manufacturing wages’ year-on-year improvement in May (3.30 percent) was their biggest since September, 2009 (3.91 percent).
>During those recessionary and early recovery days, anecdotal evidence suggested that manufacturing companies were reducing payrolls by laying off their least experienced, and lowest paid workers – thus resulting in statistical wage increases. Similar moves could explain the new disparity between employment and compensation trends.
>This morning’s revisions to the April and March on-month manufacturing job changes were slightly negative. April’s 4,000 net jobs gain was revised down to 2,000 and March’s 29,000 net loss – the worst since the 34,000 decrease in December, 2009 – remained unchanged,
>Since manufacturing hit its 2010 employment bottom, the sector has regained 832,000 (36.28 percent) of the 2.293 million jobs it lost during the recession and its aftermath. By contrast, the private sector overall lost 8.801 million jobs from the recession’s December, 2007 onset through its February, 2010 absolute employment low. Since then, it has increased net employment by a 14.548 million.
>In fact, whereas total private sector employment is now 4.97 percent higher than at the recession’s beginning, manufacturing employment is still 10.63 percent lower.
>The manufacturing wage figures in the new jobs report were both strong in their own right, and compared with wages in the private sector overall.
>May’s 0.31 percent monthly improvement in manufacturing hourly pay easily bested the private sector’s 0.20 percent, and April’s 0.66 percent manufacturing increase exceeded the private sector’s 0.35 percent.
>Year-on-year data tell the same story, with pre-inflation manufacturing manufacturing wages 3.30 percent higher and those for the private sector up 2.48 percent, and the April figures 3.06 percent and 2.53 percent, respectively.
>Longer term, though, manufacturing’s wage-laggard status remained intact, but the gap with the private sector has been narrowing. Since the current economic recovery began, in mid-2009, its pre-inflation wages are up less (12.90 percent) than overall private sector wages (15.58 percent).
>Examining manufacturing’s inflation-adjusted wages reveals similar trends. The latest Labor Department figures are from April and show again that manufacturing’s performance was stronger (rising 0.28 percent on month) than that of the private sector overall (where real wages fell 0.09 percent).
>Year-on-year, April real manufacturing wages were up 1.97 percent, versus 1.33 percent for the private sector.
>Yet since the recovery began in mid-2009 – nearly seven years ago – inflation-adjusted manufacturing wages have risen only 1.21 percent. Real private sector wages have increased more than three times faster – by 3.69 percent.