American domestic manufacturing created 1,000 net new jobs in June, but the figures underscored that the sector’s employment gains have nearly petered out recently. Including modest (3,000) downward revisions, industry’s employment has grown by only 8,000 since March. Largely as a result, manufacturing’s share of total nonfarm jobs hit a new record low – just under 8.47 percent.
Pre-inflation manufacturing wages ticked up sequentially in June (by 0.08 percent) and the pace of annual increases rose from May’s 1.92 percent to 2.08 percent. But these advances remained the lowest since October, 2015 (2.17 percent), and industry pay continued lagging that of the overall private sector, although the gap between their rates of increase narrowed over the past year – from 22.72 percent to 22.43 percent.
Here’s my analysis of the latest monthly (June) manufacturing figures contained in this morning’s employment report from the Bureau of Labor Statistics:
>U.S. domestic manufacturing grew by 1,000 on net in June, but this modest number not only contrasted with the solid employment performance registered by the economy as a whole. It also revealed that industry’s net job creation has nearly ground to a halt.
>Including total negative revisions for April and May of 3,000, domestic manufacturers have increased payrolls by only 8,000 since March.
>Largely as a result, manufacturing’s share of total nonfarm employment sank in June to just under 8.47 percent – a new all-time low.
>After falling on month at an upwardly revised 0.34 percent in May, nominal manufacturing wages edged up sequentially in June by 0.08 percent. Yet evidence persisted of a wage lag suffered by manufacturing workers.
>The current dollar monthly wage gain for private sector workers overall was 0.15 percent – nearly twice as great as that for their manufacturing counterparts.
>The same situation held for annual wage trends. Year-on-year, manufacturing pre-inflation wages rose only 2.08 percent in June. The private sector improvement was 2.46 percent.
>Moreover, the June yearly manufacturing wage advance, along with May’s upwardly revised 1.92 percent rise, were the lowest since October, 2015’s 2.17 percent.
>Between the previous Junes, pre-inflation manufacturing wages increased by 3.47 percent.
>On a pre-inflation basis, manufacturing’s wage increases during the current economic recovery still trail those of the private sector, although the gap has narrowed slightly over the last year.
>As of June, 2016, private sector pre-inflation wages were up by 15.72 percent during the expansion (which began in mid-2009) and manufacturing wages were up 12.81 percent. Therefore, private sector wages had risen by 22.72 percent faster than manufacturing wages.
>As of this June, private sector pre-inflation wages were up by 18.56 percent during the recovery, while manufacturing pay was up by 15.16 percent. Therefore, the gap between the rates of increase had shrunk to 22.43 percent.
>Factoring in inflation darkens manufacturing’s wage picture. The latest data are from May, but they show that that month, real manufacturing wages fell sequentially by 0.28 percent while they rose by that amount for the entire private sector.
>Year-on-year in May, the 0.56 percent increase in inflation-adjusted private sector wages was unimpressive. But it beat manufacturing’s performance – which flat-lined. Between May, 2015 and May, 2016, after-inflation manufacturing wages increased by 2.45 percent.
>During the entire recovery, overall private sector real wages are up 4.27 percent. For manufacturing? Less than half that improvement: 1.49 percent.
>Manufacturing’s June year-on-year jobs increase of 49,000 greatly exceeded the previous Junes’ annual increase of 9,000, underscoring the sector’s recent exit from an employment recession.
>Nonetheless, over the longer term, manufacturing has continued to lag the private sector overall on the payroll front.
>During the current economic recovery, which began in mid-2009, manufacturing employment has grown by only 5.71 percent. For the private sector as a whole during the expansion, it’s up by 14.39 percent.
>Since the late-2007 onset of the last recession, manufacturing’s performance is equally poor. From that time to the early 2010 troughs, manufacturing lost 2.293 million jobs and private sector payrolls shrank by 8.801 million.
>Since then, manufacturing has regained just 41.12 percent of those lost jobs (a total of 943,000). The private sector as a whole has boosted employment by 16.794 million.
>As a result, total private sector employment is now 6.91 percent higher than at the recession’s late-2007 onset, but manufacturing employment is still 9.82 percent lower.