Tags
aluminum, core capex, Jobs, Labor Department, manufacturing, metals tariffs, metals-using industries, private sector, steel, tariffs, Trade, {What's Left of) Our Economy
This is getting just embarrassing. Economists and mainstream media reporters and pundits keep claiming that President Trump’s metals tariffs are already damaging the U.S. economy – and especially industries that heavily use the steel and aluminum that have become more expensive because of the levies on imports of those goods. (Here’s a new example.)
And the most authoritative data available keep demonstrating that these claims so far are absolute hokum. (See this RealityChek column for a summary and relevant links.) The latest evidence: this morning’s August jobs report from the Labor Department. It shows emphatically that those metals-using sectors have mainly created net new jobs at a faster pace than domestic manufacturing overall, and that several have boosted payrolls more rapidly than the entire private sector (including service industries that are not heavy metals users).
Here are the numbers showing the relevant rate of employment changes from April (the first full month in which the metals tariffs were in effect) through both July (where they stood as of the previous monthly jobs report) and through August:
thru July thru August
entire private sector: +0.53 percent +0.64 percent
overall manufacturing: +0.73 percent +0.47 percent
durable goods: +0.96 percent +0.57 percent
fabricated metals products: +1.10 percent +1.17 percent
non-electrical machinery: +1.43 percent +1.04 percent
automotive vehicles & parts: +1.06 percent -1.08 percent
household appliances (thru June): -0.63 percent +0.16 percent (thru July)
aerospace products & parts (thru June): +1.05 percent +2.03 percent (thru July)
There have been some shifts within this list. But with the exception of automotive, no metals-using sector has slacked off more than manufacturing as a whole, and three of these industries (fabricated metals products, appliances, and aerospace) have picked up the pace. And even the metals-using durable goods super-sector as a whole didn’t fade much more on the employment front than manufacturing overall.
In addition, yesterday’s official business investment numbers confirmed that, through July, new orders for core capital goods (such machinery and equipment minus demand for defense and the volatile numbers for aircraft) have now advanced sequentially for four straight months. Since “core capex” is rightly viewed as the economy’s best proxy for business’ confidence in its future prospects, these results stuck a new fork in the narrative that the Trump tariffs would vitiate such spending by boosting that predominant bugaboo of corporate planning – uncertainty.
The new jobs report did contain some disquieting news for domestic manufacturing. Payrolls fell on month in August (by 3,000) for the first time since July, 2017. And the revisions pretty much cut the previously reported impressive June and July gains in half. (The new July increase of 18,000 is still preliminary.)
But today’s employment release also made clear that, after several months of metals tariffs, the fears about their impact are no more than fears. Why is that not considered newsworthy?
RealityChek 
It isn’t newsworthy because 90-92% of the mainstream media is liberal or left of center, ergo they ignore or bury it.
Their idea or hope that these economic numbers were temporary are fading fast.
“The U.S. economy created 201,000 nonfarm payroll jobs for the month versus the 191,000 estimate from economists surveyed by Reuters. Average hourly earnings rose 2.9 percent for the month on an annualized basis, the highest since April 2009.”
Our Q2 GDP was revised upwards to 4.2%.
The Atlanta Fed GDO Nowcast estimates Q3 at 4.4%.
China’s stock market is down 25%?
Canada lost 51,000 jobs last month.
President Trump planning another set of tariffs on China, while the Mexico bilateral trade deal is inked.
it always amazes me that the economic “experts” keep falling into the “the world is static and the only parameter that changes is Trumps tariffs” trap … so what if the raw material costs go up … if finished product demand goes up enough it offsets the raw material increases … which appears to be what is happening … I also assume there is some efficiency gains … when raw materials are very cheap nobody worries about wasteful processes (i.e. less scrap) … but I’d bet there where some places for efficiency gains that fabricators may be implementing with slightly higher raw material costs …
What have you done on labor conditions in China?
Thanks for the question, and the answer is “not much lately” – mainly because I’ve never been persuaded that US trade or any other policies would have much positive effect on this sorry situation.