(What’s Left of) Our Economy: U.S. Manufacturing Output Surprises to the Upside Again

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aerospace, aircraft, aircraft parts, automotive, banking crisis, CCP Virus, chemicals, computer and electronics products, coronavirus, COVID 19, Federal Reserve, inflation-adjusted output, interest rates, machinery, manufacturing, manufacturing production, medical equipment, miscellaneous non-durable goods, monetary policy, pharmaceuticals, plastics and rubber products, recession, semiconductors, textiles, wood products, {What's Left of) Our Economy

Remember one of the signature expressions of 1960s sitcom character Gomer Pyle – “Surprise, surprise, surprise!”? That was my reaction to this morning’s Federal Reserve release on U.S. manufacturing production for February, which reported a second straight increase.

The February improvement was pretty marginal to be sure – 0.12 percent in after-inflation terms (the kind of numbers that will be presented here unless otherwise specified). And since its production is down on net since last February, domestic industry is still in recession. But any official gain in the hard data is noteworthy, given the lousy February sentiment-based survey results put out by many of the Federal Reserve’s regional branches (e.g., here), which have continued into March (e.g., here), and by leading private sector groups (e.g., here).

Also unexpected: January’s increase was revised up from one of 0.94 percent to one of 1.35 percent. That’s the best such performance since October, 2021’s 1.70 percent. So maybe that January figure wasn’t a one-off, as I speculated last month?

That’s not clear yet. Both the January and February advances also might still stem from a baseline effect – specifically, catch-up from an absolutely terrible December. That month’s manufacturing output decline has now been revised down a second time. Its 2.06 percent sequential dropoff is the worst such result since the 3.64 percent nose-dive in weather-affected February, 2021. But as that journalistic cliché goes, “It’s too soon to tell.”

Here’s what we do know – so far (keeping in mind that revisions of all statistics going back to 2021 will be issued on March 28).

The February report means that U.S.-based manufacturing output is now up since since just before the CCP Virus pandemic arrived stateside in force in February, 2020 by 1.65 percent – the same figure calculable from last month’s Fed release.

Only seven of the 20 broadest manufacturing sub-sectors tracked by the Fed boosted their production in February. The biggest winners were:

>the very big chemicals industry, which expanded output by 1.24 percent. Better yet, this growth came after a January increase of 3.11 percent (the best such performance since April, 2021’s 3.97 percent). The January pop looks like catch-up from December’s 2.63 slump (the worst such performance since weather-affected February, 2021’s 6.69 percent cratering). But the February follow-on could be a sign of truly regained strength.

Since immediately pre-pandemic-y February, 2020, chemicals production is up 7.52 percent, versus the 6.11 percent calculable last month;

>computer and electronic products, where production advanced for the first time since last September – and by 1.22 percent. But now it’s contracted by 0.62 percent during the CCP Virus era, versus having grown by 2.95 percent as of last month’s release; and

>wood products, whose output rose for the second straight month after having slumped for most of the past year. Not so coincidentally, this losing streak paralleled the housing industry woes prompted by the Federal Reserve’s historically rapid interest rate hikes. The February 1.11 percent gain was the best since the 2.81 percent surge last February.

But the wood products industry is still 2.49 percent smaller than it was just before the pandemic’s arrival in force, versus the 2.56 percent calculable last month.

The biggest February maufacturing output losers were:

>textiles and products, which saw production sag by 2.11 percent, the biggest decrease since last June’s 3.44 percent. The fall-off depressed output in this small sector to 12.96 percent below its February, 2020 level, versus the 8.93 percent calculable last month;

>plastics and rubber products, whose production decrease of 1.82 percent was its seventh straight monthly loss, and dragged its output losses down to 5.62 percent below its immediate pre-pandemic levels versus the 4.33 percent calculable last month; and

>miscellaneous non-durable goods, where output slipped by 1.52 percent, and pushed production down to 14.95 below its pre-pandemic level versus the 13.76 percent calculable last month.

Output also drooped in two sectors of continuing special importance to all of industry and the entire economy.

The story of CCP Virus era U.S.-based manufacturing has been in many respects a story of the automotive sector, and in February, vehicle and parts production dipped by 0.28 percent. This advance helped it draw to within 0.12 percent of its size in February, 2020, from the 1.61 percent shortfall calculable last month.

The diverse machinery industry, meanwhile, is crucial both to the rest of manufacturing and to the entire economy because its products are used so widely for retooling and modernization. So its growth indicates general manufacturing and overall business optimism, and vice versa.

Ordinarily, therefore, a moderately 0.40 percent monthly decline in machinery output would be moderately bearish, but the sector has been too volatile lately to be certain. The February decline followed a 3.42 percent burst that was the strongest since 5.12 percent pop of January, 2021. That’s a sign of a catch-up effect.

But the January results followed a 2.59 percent tumble in December that was the worst since last May’s 3.34 percent. All told, however, machinery output is now 5.54 percent greater than just before the pandemic struck, versus the 4.77 percent calculable last month.

Manufacturing sectors of special importance since the pandemic struck also suffered generally lousy Februarys performances.

The semiconductor shortages that have caused so many headaches for U.S. and foreign manufacturers seem to be easing, but supplies remain inadequate for many customers. And the situation won’t be helped by the 1.65 percent real output decrease U.S.-based chip production suffered in February.

Worse, this decrease was the sector’s eighth in a row – and some of these estimates have been revised down substantially. Due to these poor and worsening results, whereas as of last month’s Fed release, U.S. semiconductor output was 4.47 percent above its immediate pre-CCPVirus levels; now it’s 7.83 percent below.

Medical equipment and supplies, which contains the healthcare products used so widely to combat the pandemic, suffered a 0.73 percent real output contraction – its fifth straight monthly decrease.

Medical equipment and supplies output in February dropped for the fifth time in the last six months. But even with this latest 0.51 percent retreat, production in this sector – which includes so many of the products used to fight the CCP Virus – is now 10.52 percent higher than jut before the pandemic hit, versus the 9.85 percent calculable last month.

Production in pharmaceuticals and medicines was off by 0.54 percent in February, but the decrease was the first since last July, and depressed this big sector’s growth since immediately prepandemic-y February, 2020 to 20.42 percent versus the 21.44 percent calculable last month.

The exceptions to this pattern were aircraft and aircraft parts-makers – possibly because industry giant Boeing’s fortunes seem to be looking up finally. Their output increased by 0.35 percent in February, and is now up 30.19 percent since the advent of a pandemic that long hammered travel of all kinds, versus the 35.81 percent calculable last month.

What lies ahead? The entrails remain difficult to read, especially since the new banking crisis is creating doubt as to whether the Federal Reserve will continue an inflation-fighting effort it’s been making vigorously but that still hasn’t produced the economy slowdown it’s seeking – but that may at some point because these monetary tightening moves typically don’t start working for many months. See what I mean? 

If the central bank remains on course, domestic manufacturing’s troubles seem certain to return. But as long as the economy keeps defiantly expanding, its power may bring U.S.-based industry securely back into growth mode.

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(What’s Left of) Our Economy: U.S. Manufacturing’s Employment Win Streak Comes to an End

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aircraft, aircraft engines, aircraft parts, apparel, automotive, CCP Virus, chemicals, computer and electronics products, coronavirus, COVID 19, Employment, furniture, Jobs, machinery, manufacturing, non-farm jobs, non-metallic mineral products, pharmaceuticals, plastics and rubber products, private sector, semiconductors, surgical equipment, textiles, vaccines, {What's Left of) Our Economy

A payrolls loss even as the rest of the American economy continued to create gobs of jobs – that was the big manufacturing takeaway from this morning’s official release on U.S. employment for February.

Although job creation for the non-farm economy (the federal government’s definition of the U.S. employment universe) came in at a robust 311,000, domestic industry shed headcount (by 4,000) for the first time since April, 2021.

Moreover, the modest manufacturing job increase of January, which contrasted so strikingly with the blowout performance recorded by non-farm businesses overall, was revised down – from an initially reported 19,000 to 13,000. The initially reported January total U.S. jobs gain of 517,000 was reduced this morning as well. But unlike the manufacturing results, the new figure (504,000) is still astronomical.

The new February numbers pushed U.S.-based manufacturing deeper into CCP Virus-era employment laggard status. Since February, 2020 (just before the pandemic arrived in force in the United States), domestic industry has boosted headcount by 1.55 percent. the private sector overall by 2.59 percent, and the non-farm sector (which includes public sector workers at all levels of government) by 1.96 percent.

As of last month’s release, manufacturing jobs were up 1.67 percent since February, 2020, private sector jobs up 2.46 percent, and non-farm jobs up 1.77 percent.

Consequently, manufacturing’s share of non-farm jobs has sunk from the 8.38 percent calculable as of last month’s report to 8.36 percent, and from its immediate pre-pandemic level of 8.39 percent.

And its share of private sector jobs is down from the 9.80 percent calculable last month to 9.77 percent, and from its immediate pre-pandemic level of 9.87 percent.

February’s biggest manufacturing jobs winners were:

>computer and electronics products, which added 2,800 workers on month fo its best such performance since last October’s 3,300. In addition, January’s initially reported 700 employment drop is judged to be an increase of 100.

These companies’ workforces are now 2.08 percent higher than in immediately pre-pandemic-y February, 2020, versus the 1.77 percent increase calculable last month;

>chemicals, whose payrolls expanded by 2,500 in a resumption of a multi-year string of healthy monthly gains. Indeed, this sequential advance followed an upwardly revised loss of 1,400 jobs that was the sector’s worst such performance since the 2,200 decline in May, 2021.

Chemicals employment is now 7.40 percent greater than it was just before the pandemic struck versus the 6.80 percent growth calculable as of last month;

>beverage, tobacco and leather products (a new name for miscellaneous non-durable goods), which hired 1,900 workers in February. January’s initially reported rise of 5,000 (which had been its best such performance since last June’s 6,300 surge) has now been downgraded to one of 3,100, but remained strong nonetheless.

Job levels in this sector, therefore, are still up by an impressive 10.42 percent since February, 2020 – down just slightly from the 10.45 percent calculable last month; and

>non-metallic mineral products, which boosted payrolls by 1,500, but whose excellent first-reported January results (4,200 – thought to be the best since last February’s 5,600 pop) have also been downwardly revised (to 1,700).

Companies in this sector have now boosted their workforces by 3.74 percent since the virus’ arrival state-side in force, versus the 4.02 percent calculable last month.

February’s biggest manufacturing jobs losers were:

>plastics and rubber products, where employment fell by 4,700 to resume a weak employment stretch that began last October. January’s gain, meanwhile, was revised from 1,200 to 1,100.

Employment in these industries is now 2.99 higher than in February, 2020 – above the overall manufacturing figure but down from the 3.52 percent calculable last month;

>furniture and related products, which also continued a recent losing streak by cutting 2,800 positions. At least January’s initially reported decrease of 700 has been upgraded to one of 500. Headcounts in these sectors are now off by 3.60 percent since the CCP Virus began roiling the U.S. economy in February, 2020, versus the 2.71 percent calculable last month;

>textile mills, a very small sector whose 1,700 jobs retreat was its worst such perfomance since the identical decrease in July, 2020 – as the economy had begun recovering from the effects of the CCP Virus’ first wave. Further, January’s initially reported 900 jobs gain was revised down to one of 700.

These results left textile mill employment 10.88 percent lower than in February, 2020 versus the 8.91 percent calculable last month; and

>apparel, another very small industry, which cut employment by 1,300. This loss, moreover, comes on top of a January drop of 1,900 that was initially reported as one of 2,100. The apparel workforce is now 11.32 percent smaller than just before the pandemic’s arrival in force, versus the 9.02 percent calculable last month.

RealityChek has also been tracking employment in two industries of special importance to manufacturing and the economy overall, and both eaked out tiny hiring increases in February.

Machinery data have been an emphasis because its products are used to equip and modernize nearly all manufacturing and non-manufacturing sectors. So changes in its workforce can signal optimism or pessimism about their prospects.

This big, varied sector extended its monthly job creation winning streak to nine in February, but by a bare 400. January’s results remained in the black, too, but were revised down from an increase of 2,000 to one of 1,000. Payrolls in machinery have now grown by 1.10 percent since just before the pandemic era began, in February, 2020, versus the 1.13 percent calculable last month.

Automotive’s February headcount gain was even smaller – just 200. Nor was it much of a rebound from January’s contraction, which was revised up from one of 6,500 loss to one of 5,100. But the automotive workforce is now 5.91 percent larger than in February, 2020, versus the 5.70 percent calculable last month.

Monitored by RealityChek as well have been several narrower sectors that have attracted special attention during the CCP Virus era, but where the data are always a month behind those of the above broader sectors, Their employment performances were overall positive but with one exception modestly so.

The shortages plaguing the semiconductor industry have bled over into much of the rest of the economy in recent years, which largely explains why Washington has now decided to spend tens of billions of dollars over the next decade to support more domestic production.

Jobs in the category called “semiconductors and related devices” inched up by 300 in January, but – continuing a pattern described above elsewhere in manufacturing – December’s initially reported increase of 800 is now judged to have been just 400. The workforce in this grouping has now grown by 10.79 percent since just before the pandemic struck in full force – a figure that’s better than it looks since these companies’ cut relatively few jobs during the short but deep virus-induced downturn of spring, 2020.

Aircaft manufacturing was pummeled by a combination of pandemic-era travel curbs and Boeing’s production woes, but employment lately has staged a strong comeback. January’s net new hires numbered 400 and December’s initially reported jump of 1,100 has been upgraded to one of 1,500.

Job levels in the sector have now closed to within 3.45 percent of their immediate pre-pandemic numbers, versus having been down 5.56 percent as of last month’s jobs report.

Aircraft engines and engine parts-makers added just 100 new employees in January, but December’s increase of 800 – the best such performance since July’s 900 – remained unrevised. Their payrolls are now just 7.97 percent lower than their immediate pre-pandemic total versus the 8.08 percent shortfall calculable last month.

Non-engine aircraft parts producers reduced their workforces by 100 in January, but December’s hiring increase was revised from 100 to 200. So their headcounts are still off by 16.44 percent during the pandemic period – the same figure calculable last month.

Surgical appliances- and supplies-makers have been in the spotlight since the virus’ arrival in force, since this grouping contains so many of the products used to fight the pandemic. They increased their workforces by 100 in January, but December’s initially reported loss of 400 is now judged to have been one of 500.

As with non-engine aircraft parts their employment level since February, 2020 stayed the same as calculable in December, but in the case of surgical appliances and supplies, the change has been positive – by 1.14 percent.

The big pharmaceuticals and medicines sector was a notable exception to this employment pattern of marginal change, as its companies’ boosted employment by 1,800. But these gains followed December cuts that were upgraded from an initially reported 1,100 to 2,000 – the sector’s worst such performance since the 2,900 nosedive last July.

Yet upward revisions in previous months enabled the gain in the pharmaceuticals and medicines employment to rise since February, 2020 from the 14.25 percent calculable last month to 14.54 percent.

The news was much worse in the pharmaceutical sub-sector that contains vaccines. Employment tumbled in January for the second straight month (by 100) and December’s initially reported plunge of 1,200 is now pegged as one of 1,300.

These drops depressed this grouping’s employment expansion since immediately pre-pandemic-y February, 2020 – but only from the 20.10 percent calculable last month to a still sterling 19.90 percent.

With the U.S. economy lately growing more vigorously than widely predicted, it’s certainly possible that its surprising strength will bring an end to manufacturing’s ongoing production recession and its recent weak hiring.  And the federal government has certainly been trying to lend a helping hand via the aforementioned semiconductor subsidies, along with an infrastructure bill, and  green subsidies – both of which contain Buy American requirements. 

But it’s also possible that the last few months’ worth of data are telling us that the fortunes of manufacturing and the rest of the domestic economy are being decoupled.  Indeed, industry’s still towering trade deficit is one indication, making clear that the consumption of manufactures remains much greater than their production. 

Compounding the uncertainty:  February’s manufacturing jobs loss could be washed away via revisions in next month’s jobs report.  But at the least, this first employment drop in nearly two years might signal that domestic manufacturers are no longer hoarding workers as zealously as other sectors of the economy have been.  If so, expect manufacturing employment to continue stagnating.         

(What’s Left of) Our Economy: Those New U.S. Manufacturing Growth Numbers Look Like a Head Fake

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aerospace, aircraft, aircraft parts, apparel, automotive, Federal Reserve, furniture, machinery, manufacturing, medical equipment, miscellaneous non-durable goods, non-metallic mineral products, petroleum and coal products, pharmaceuticals, plastics and rubber products, printing, recession, semiconductors, textiles, wood products, {What's Left of) Our Economy

U.S.-based manufacturing’s inflation-adjusted output rose a surprising 0.94 percent sequentially in January, according to today’s report from the Federal Reserve. Moreover, the real production increases were widespread, with 15 of the 20 broadest sub-sectors growing in real terms.

But to me, the results look like a one-off, for two main reasons. First, the January gain was domestic industry’s best such performance since last February’s 1.23 percent jump. That alone suggests a departure from a longer-lasting (and therefore more important) pattern. Indeed, according to most definitions, manufacturing remains in recession despite the January pop, with constant-dollar output down on net by 1.57 percent since March.

Second, a baseline effect may well be at work here – in this case, with price-adjusted production simply engaging in some catch-up from an unusually bad (even by recent dreary standards) prior read. In this vein, December’s sequential tumble of a downwardly revised 1.77 percent was domestic industry’s worst such performance since the 3.64 percent plunge in weather-affected February, 2021.

On the plus side, the January numbers leave U.S.-based manufacturing output 1.65 percent higher since just before the CCP Virus pandemic arrived stateside in force in February, 2020. As of last month’s Fed release, this advance stood at 1.21 percent.

The biggest manufacturing monthly growth winners mirrored to some extent the total sector’s pattern of a multi-month best followed by multi-month worsts. They were:

>apparel and leather goods,whose 3.66 real production surge was the best since its 5.92 burst last June. But this gain followed a December drop of 0.70 percent that was the biggest since last August’s 2.95 percent;

>non-metallic mineral products, where the inflation-adjusted production advance of 2.39 percent was its strongest since last February’s 4.39 percent. But this increase followed a 0.83 slip that was the worst since last April’s 1.52 percent retreat;

>miscellaneous non-durable goods, where constant dollar growth of 2.24 percent was its best such gain since last March’s 2.63 percent. But its November loss of 2.39 percent was the greatest since last May’s 2.57 percent; and

>textiles and products, which boosted price-adjusted output by 2.20 percent – its best such perfomance since the 2.33 percent rise in March, 2021. But in December, the sector shrank in real terms by a sizable 0.99 percent.

As for January’s monthly production losers, they started or extended losing streaks:

>plastics and rubber products’ constant-dollar output fell by 0.96 percent in its sixth straight decline;

>wood products’ after-inflation production sank for a second consecutive month – this time by 0.94 percent;

>furniture’s 0.70 decrease was its fourth straight retreat; and

>printing and related activities’ 0.56 shrinkage was its second straight drop.

The other January monthly production loser – petroleum and coal products – experienced only a 0.17 percent dip.  That was just its second straight, but followed a 3.22 percent plunge that was its worst since the 5.75 percent nosedive of weather-affected February, 2021.

Two sectors of continuing special importance to both all of industry and the entire economy displayed real production increases in January that looked especially baseline-y.

RealityChek regulars know that the fortunes of the automotive sector went far toward explaining manufacturing’s overall performance in the early pandemic period in particular. Real vehicle and parts making output climbed by 0.54, but this January improvement came after two big drops that included November’s 3.68 percent – its worst month since last February’s 3.81 percent fall-off.

Machinery-making matters because its products are used so widely by all other sectors to retool and modernize. So the 1.74 percent inflation-adjusted production increase achieved by these companies – their best such performance since last August’s 2.03 percent – would seem to indicate American business optimism about its future prospects. But this jump followed a 2.55 percent decline that was machinery’s worst since last May’s 3.34 percent.

Manufacturing sectors of special importance since the pandemic struck turned in mixed January performances.

The semiconductor industry, long plagued by shortages and in line to receive massive federal government assistance, saw price-adjusted production worsen by 0.36 percent. This seventh consecutive monthly decline followed three major decreases that included a 2.61 percent loss in December that was the sector’s worst since last April’s 3.17 percent.

Medical equipment and supplies, which contains the healthcare products used so widely to combat the pandemic, suffered a 0.73 percent real output contraction – its fifth straight monthly decrease.

More encouraging results were recorded for aircraft and aircraft parts makers – which were hit so hard by pandemic-induced travel curbs. Their January growth after inflation of 0.54 percent was their fourth straight gain.

And pharmaceuticals and medicines’ constant dollar output improvement of 0.75 percent was its sixth straight advance.

Since the entire U.S. economy keeps defying predictions of recession, no one can reasonably rule out domestic manufacturing benefiting from this unexpected strength. But at least in the short term, the nation is eminently capable of continuing to grow despite troubles in industry, and much more encouraging manufacturing data will be needed to show convincingly that this won’t be the case again.    

(What’s Left of) Our Economy: Amid a U.S.-Wide Hiring Burst, Manufacturing Job Creation Trudges Along

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aircraft, aircraft engines, aircraft parts, automotive, CCP Virus, chemicals, computer and electronics products, coronavirus, COVID 19, Employment, fabricated metal product, Federal Reserve, food manufacturing, inflation, Jobs, machinery, manufacturing, medicines, non-farm payrolls, non-metallic mineral products, pharmaceuticals, private sector, recession, semiconductors, surgical equipment, transportation equipment, vaccines, {What's Left of) Our Economy

Although today’s official new U.S. jobs report (for January) showed a completely unexpected burst of monthly employment creation for the economy as a whole, domestic manufacturing shared only modestly in this sequential boom. Moreover, some long-term revisions released along with the new numbers show that U.S.-based industry remains in a hiring slowdown, though one less severe than previously reported.

Between December and January, domestic manufacturers increased payrolls by 19,000 – the best such result since October’s 37,000. December’s initially reported gain of 8,000 has been upgraded to one of 12,000, and November’s identical original estimate of an 8,000 monthly rise now stands at 14,000.

In addition, according to the revisions, for full-year 2022, manufacturing expanded its headcounts by 396,000 (3.15 percent) versus the 379,000 (3.02 percent) recorded last month.

Consequently, domestic industry’s employment advance still decelerated during the second half of last year, the slowdown was less than initially reported. As of last month’s jobs report, its average monthly job creation downshifted from 39,830 between January and June to 23,330 between July and December. Yet the revisions judge that the first half average was 39,170 and that the second half average was 26,830.

January’s biggest manufacturing jobs winners among the broadest sub-sectors tracked by the U.S. Labor Department were:

>food manufacturing, where hiring hit 6,900. Head counts in this very big industry moved 4.33 percent higher than in immediately pre-pandemic-y February, 2020, versus the 3.79 percent calculable in last month’s pre-revisions data (the figure that will be used for comparison unless otherwise specified);

>beverage, tobacco, and leather and allied product manufacturing (a new name for miscellaneous non-durable goods), which added 5,000 employees on net for its best such performance since last June’s 6,300 pop. Headcounts here are now 10.45 percent above their February, 2020 level, versus the 9.75 percent rise calculable last month;

>non-metallic minerals, whose workforce grew by 4,200 in its best monthly advance since last February’s 5,600. Jobs are now up 4.02 percent since just before the CCP Virus’ arrival stateside in force, versus the 0.14 percent increase calculable as of last month; and

>fabricated metal product, whose companies added 3,100 employees. Even so, employment in this very big sector sank to 0.91 percent less than in February, 2020, versus the 0.73 percent shortfall calculable last month.

The biggest January job losers among the broadest manufacturing sub-sectors were:

>transportation equipment, a big, diverse group of industries whose 8,400 sequential jobs decline followed a six-month tear that featured a surge of 15,000 in December. Still, the latest result was the worst since last May’s 8,700 plunge. Employment in the transportation equipment cluster has climbed by 2.57 percent since that last full data month before the pandemic’s arrival, versus the two percent figure calculable last month;

>chemicals, another large, diverse category that lost 3,500 workers on month in January. This second straight big drop, however, followed a strong run that began back in late 2021, and employment has now improved by 6.80 percent since February, 2020, versus the 6.44 percent rise calculable last month; and

>computer and electronics product manufacturing shed 700 positions in its weakest monthly perfomance sinc September’s 1,300 drop. But its payrolls moved up to 1.77 percent higher during the pandemic period and its emerging aftermath, versus the 1.39percent increase calculable last month.

RealityChek also tracks employment in two industries of special importance to manufacturing and the economy overall, and their January employment experiences differed dramatically.

Machinery matters greatly because its products are used extensively in nearly all manufacturing and non-manufacturing sectors, and changes in its workforce can signal optimism or pessimism about their prospects.

So the 2,000 monthly increase in machinery workers in January seems to augur well for continued expansion. Moreover, this gain pushed the sector’s employment levels back above where they were just before the pandemic began roiling and distorting the nation’s economy and society – by 1.13 percent. As of last month, they were still 0.24 percent less than in February, 2020.

Yet the automotive industry, whose fortunes have greatly affected domestic industry’s aggregate performance for most of the pandemic period, saw head counts tumble by 6,500 in its worst such performance since last February’s 23,900 plunge. Despite the setback, however, the motor vehicle and parts workforce is now 5.70 percent bigger than just before the pandemic’s arrival, versus the 5.46 percent calculable last month.

RealityChek also tracks a number of narrower sectors that have attracted special attention during the CCP Virus era, but where the data are always a month behind those of the above broader sectors,and their Decembers were substantially mixed jobs-wise, too. Comparisons with pre-revisions November data aren’t possible in these cases, though, because those figures aren’t publicly available.

The shortage-plagued semiconductor and electronic components industries boosted its payrolls by 800, bringing their employment levels 5.56 percent above their totals in immediately pre-pandemic-y February, 2020.

The aircraft manufacturers that were so hard hit both by pandemic-era travel curbs and Boeing’s production woes, continued a recent employment rebound by adding 1,100 more workers in December. But they still employ 5.56 percent fewer than just before the virus’ arrival.

Not surprisingly, aircraft engines and engine parts-makers hired another 800 employees that month for their best such performance since July’s 900. Their headcounts are now off just 8.08 percent since February, 2020.

Non-engine aircraft parts producers’ payrolls increased by 100, but are still down 16.44 percent since the pandemic era began.

The story was very different, however, in many of America’s key healthcare manufacturing sectors, as all three followed here reported December job cuts.

In the surgical appliances and supplies industries that turn out so many of the products used to fight the CCP Virus, employment fell by 400 – their worst such performance since last June’s 600 decline. Their headcounts are now just 1.14 percent bigger than in February, 2020

The big pharmaceuticals and medicines sectors shrank their workforces by 1,100 – the most since July’s 2,900 falloff. But employment here is still up 14.25 percent since that last full pre-pandemic data month of February, 2020.

The pharmaceutical sub-sector that contains vaccines let 1,200 employees go in December in its worst such performance since back in December, 2018 when they also laid off 1,200. But since February, 2020, their payrolls have still risen by 20.10 percent.

Optimists can legitimately observe that U.S.-based manufacturing’s meh employment increases lately have been pretty impressive given that the sector has been in a recession (albeit a mild one) for just over a year. But since the pandemic’s peak in the spring of 2020, it’s benefited pretty consistently from a strongly recovering broader economy. It’s anything but clear if domestic industry can keep up even that sluggish pace if the Federal Reserve’s anti-inflation policies do start slowing growth, much less trigger a recession.    

(What’s Left of) Our Economy: Today’s Really Recession-y U.S. Manufacturing Production Report

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aircraft, aircraft parts, Federal Reserve, machinery, manufacturing, medical devices, medical equipment, miscellaneous transportation equipment, nonmetallic mineral products, output, petroleum and coal products, pharmaceuticals, primary metals, printing, production, real output, recession, semiconductors, soft landing, {What's Left of) Our Economy

A U.S. recession is either imminent or already here – that’s the main message being strongly suggested by today’s release by the Federal Reserve on inflation-adjusted manufacturing production (for December).

Not only did industry’s real output sink by 1.30 percent sequentially – the worst such result since February, 2021’s 3.64 percent weather-affected plunge. But November’s initially reported 0.62 percent retreat was revised down to one of 1.10 percent.

Two straight monthly drops of one percent or more each haven’t been recorded by U.S.-based manufacturers since the February through April, 2020 period – when the arrival of the CCP Virus began roiling American life and the national economy, and indeed threw the latter into a deep downturn.

The new figures pushed price-adjusted U.S. manufacturing production into contraction for full-year 2022 – by 0.41 percent. That’s a major deterioration from the 4.19 percent constant dollar gain in 2021 – the strongest such showing since the 6.48 percent achieved in 2010, during the recovery from the Global Financial Crisis and ensuing Great Recession.

Moreover, since just before the pandemic arrived in force in the United States (February, 2020), after-inflation manufactuing has now grown by just 1.21 percent. As of last month’s industrial production release, this figure stood at 3.07 percent.

Of the twenty broadest manufacturing sub-sectors tracked by the Fed, only three boosted monthly inflation-adjusted production in December: aeropace and miscellaneous transportation equipment (0.96 percent), primary metals (0.84 percent), and nononmetallic mineral products (0.65 percent).

The biggest losers among their 17 other counterparts were machinery and printing and related support activities (3.37 percent each), and petroleum and coal products (3.13 percent).

Especially concerning, and continuing a pattern identified last month – for machinery and printing, these results were the worst since April, 2020, at the peak of the CCP Virus’ devastating first wave, when their real output collapsed month-to-month by 18.64 percent and 23.10 percent, respectively. Meanwhile, the monthly decrease in petroleum and coal products was its biggest since weather-affected February, 2021.

And as known by RealityChek regulars, machinery’s tumble last month is a particularly bright red flag. Because its products are used so widely in sectors inside and outside of manufacturing – including by growing companies or firms counting on continued or faster growth – its fortunes are seen as a good predictor of the economy’s future. Therefore, a big machinery production decrease (the second in a row) could well mean that business activity across the national board is at least slowing markedly and won’t be reviving any time soon.

The December numbers were only somewhat better for sectors of special interest since the CCP Virus’ arrival stateside. Sequential increases were registered in pharmaceuticals and medicine (by 1.10 percent) and aircraft and parts (by 1.49 percent). But price-adjusted output fell in automotive (by 1.03 percent), the shortage-plagued semiconductor industry (by 1.20 percent), and the medical equipment and supplies sector that encompasses products heavily used to fight the pandemic (by 2.50 percent).

In addition, the slippage in medical equipment and supplies was one of those that was the greatest since the peak of the CCP Virus’ first wave (when it nosedived by 17.76 percent).

Since manufacturing is only about fifteen or sixteen percent of the total U.S. economy (depending on how you count output), a downturn in industry doesn’t necessarily presage an overall recession. But the new industrial production statistics aren’t the only signs of shrinkage. Consumer spending comprises nearly 71 percent of the economy according to the latest (third quarter, 2021) data, and today’s advance official retail sales report (for December) indicates that they’ve now fallen consecutively for two months. Possibly weaker inflation (indicated most recently by today’s wholesale price report, which I’ll post about tomorrow), also signals gloomy times ahead.

Since the new Fed manufacturing production results will be revised several times over the next few months, it’s possible that the real picture in industry could brighten somewhat. But likelier, in my view (as I wrote yesterday), is for a recession-averse Washington to move to stimulate consumer spending without seeking similar results for production – in other words, a time-tested formula for stagflation at best for the foreseeable future.

P.S. As alert readers may have noticed, this post contains many fewer manufacturing production details than its recent predecessors. My aim is to ensure that I can get this info to you on a same-day basis. Do you like this simpler format better? Or should I return to going deeper into the weeds? Please let me know if you get a chance.         

        

(What’s Left of) Our Economy: Manufacturing Job Creation Downshifts Further

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aerospace, aircraft, aircraft engines, aircraft parts, automotive, CCP Virus, chemicals, coronavirus, COVID 19, Employment, fabricated metal products, food products, furniture, Jobs, machinery, manufacturing, non-metallic mineral products, petroleum and coal products, pharmaceuticals, semiconductors, surgical equipment, transportation equipment, vaccines, {What's Left of) Our Economy

No doubt about it now – at least for now. As yesterday’s official U.S. employment data (for December) confirm, domestic manufacturing is experiencing a pronounced job-creation slowdown.

Of course, these latest figures, as well as November’s, are still preliminary. But it would take mammoth revisions to change this narrative. U.S.-based manufacturers upped their payrolls by only 8,000 on month in December. On top of the same (downwardly revised) November employee increase, those last two data months have each seen industry’s weakest job gains since the 28,000 loss suffered in April, 2021. And the new October and November figures are downgrades, too.

Another perspective: During the first half of this year, manufacturing employment rose by an average of 39,830. So far, during the second half of the year, this monthly average is down to 23,330.

Moreover, the unimpressive recent results have placed the private sector overall ahead of manufacturing as an employment generator during the post-CCP Virus period. Since February, 2020 – the last full data month before the pandemic began hammering and roiling the economy – the former’s head counts are up 1.29 percent versus 1.17 percent for manufacturing. Last month, manufacturing held the lead by 1.17 percent to 1.16 percent. (Government payrolls at all levels are still down by 1.91 percent during this stretch.

Consequently, manufacturing’s share of total U.S. private sector jobs slipped for the second straight month – from 9.86 percent to 9.85 percent. But industry’s strong two years of hiring mean that this percentage is still higher than the immediate pre-CCP Virus level of 9.83 percent. And the December results still left the manufacturing workforce at its highest level (12.934 million) since November, 2008’s 13.034 million.

Nonetheless, the December jobs report was by no means devoid of bright spots, as the rundown that follows will show that several major industries created gobs of jobs during the month.

December’s biggest manufacturing jobs winners among the broadest sub-sectors tracked by the U.S. Labor Department were:

>transportation equipment, a big, diverse grouping boosted employment by 15,200 in December – its best such performance since August’s 20,900. Revisions were mixed, with November’s initially reported 6,100 advance downgraded to one of 4,500; October’s initially reported 4,700 increased revised way up to 13,200, and then again to 14,500; and September’s original 8,400 increase downgraded to 4,700 but then revised up to settle at 6,300.

Employment in transportation equipment is now 1.94 percent higher than in the last full pre-CCP Virus data month of February, 2020, versus the 1.08 percent calculable last month;

>non-metallic mineral products, where payrolls improved by 4,500 in December in the best monthly performance since December, 2020’s 5,200. Revisions were mixed here, too. November’s initially reported 1,800 gain is now recorded as a loss of 800; October’s results have gone from an increase of 3,200 to one of 2,900 and back to 3,000; and September’s initially reported 1,500 job loss was revised up to a dip of just 200 before settling at a decrease of 300.

The non-metallic mineral products workforce has now expanded by 0.57 percent since immediately pre-pandemic-y February, 2020, versus the 0.01 percent calculable last month.

>machinery, a bellwether for the entire economy, since its products are so widely used in both manufacturing and non-manufacturing sectors, enjoyed job growth of 3,300 in December. Revisions were positive overall. November’s advance of 3,900 was revised up to one of 4,200 – its best monthly increase since April’s 5,800. October’s initially reported 3,000 increase was upgraded to 3,600 but then revised back down to the original 3,000. But September’s initially reported 1,700 decrease (then the sector’s worst such total since November, 2021’s 7,000 plunge) was upgraded to a decline of just 300, where it finally settled.

This performance moved machinery’s head count to within 0.28 percent of its February, 2020 level, versus the 0.55 gap percent calculable last month;

>food manufacturing, another big industry, which saw employment rise by 3,300 in December. Revisions were overall positive. November’s initially reported 3,400 increase is now judged to have been 4,200. October’s initially reported 1,000 rise was downgraded to 500, but then revised back up to 900. And although September’s initially reported 7,800 job growth was ultimately revised down to 7,600, it was still the sector’s best such performance since February’s 11,100.

The food manufacturing workforce has now expanded by 3.80 percent since just before the pandemic’s arrival in force, versus the 3.52 percent calculable last month; and`

>fabricated metal products, another sizable sector, upped employment by 2,900 in December, and revisions were mixed. November’s net new hires were revised down from 1,300 to 500. October’s results were at first downgraded from a 5,200 increase to one of 5,000, but then revised up to 6,600 (the strongest such number since April’s identical increase. But September’s initially reported advance of 6,300 has been downgraded significantly, to 5,500 and then finally to 2,300.

Job levels in fabricated metal products is now off by 0.93 percent since February, 2020, versus a 1.18 percent shortfall calculable last month.

The biggest December jobs losers among the broadest manufacturing categories were:

>chemicals, a big category whose 5,700 employment contraction in December was its first drop since August, 2021 and by far the worst since the 20,000 nosedive of April, 2020, when the devastating effects of the CCP Virus’ first wave were peaking. Revisions, moreover, were negative on net. November’s initially reported 4,700 head count climb (then chemicals’ best result since May’s 5,100 improvement) to 3,600. After having been upgraded from 1,600 to 2,200, October’s rise was revised down to 1,700. But September’s initially reported 3,400 increase was downgraded to one of 2,700 before being upgraded again to its final level of 3,200.

The chemicals workforce is now 6.47 percent greater than in immediately pre-pandemic-y February, 2020 – down from the 7.32 percent increase calculable last month;

>petroleum and coal products, a sector whose payrolls weakened by 3,300 in December – its worst such performance since the 3,500 jobs lost in winter weather-affected January, 2021. Revisions were mixed, though. November’s initially reported 900 jobs added now stands at 1,100 (the best such increase since February’s 2,000). October’s results bounced up from an initially reported employment dip of 100 to a gain of 200 and back to a 100 loss. And September’s initially reported head count advance of 300 has stayed upgaded to 400 for three months.

But the December fall-off dragged petroleum and coal products employment down to 8.31 percent below its level just before the pandemic’s arrival in force, versus the 5.31 percent gap calculable last month;

>furniture and related products, whose 2,900 employment decrease was its worst since the 73,900 catastrophe suffered in April, 2020 – during the height of the pandemic’s first wave. Revisions, moreover, were significantly negative – no surprise given the recent woes of the nation’s housing sector. November’s initially reported slump of 1,500 is now estimated at 1,900. October’s results have deteriorated from a slip of 200 to one of 400. And September’s initially reported 300 decrease now stands at one of 600.

These employment setbacks have pushed the furniture industry’s workforce down to 2.31 percent below its February, 2020 levels, versus the 1.33 percent calculable last month; and

>miscellaneous nondurable goods, which also reduced its payrolls by 2,900 in December, and whose revisions were negative on net. November’s initially reported jobs gain of 1,200 is now pegged as a retreat of 3,300 – these companies’ worst such performance since they cut 9,400 positions in December, 2020. After October’s gain of 2,100 was upgraded to one of 3,300, it was lowered to 2,700 – which at least was still the best such performance since June’s 5,400. But September’s results have been revised up from 1,300 net new hires to 2,000 and have settled at 2,300.

This diverse group of industries’ have now enlarged their workforce by 9,68 percent since immediately pre-pandemic-y February, 2020, versus the 12.13 percent calculable last month.

As known by RealityChek regulars, throughout the CCP Virus period, the automotive industry’s employment gyrations have influenced manufacturing’s overall hiring, and in December, as with other sectors examined above, its robust job creation helped keep industry’s monthly total in the black.

Indeed, U.S.-based vehicle and parts makers added 7,400 workers on month, and revisions were positive. November’s initially reported increase of 1,900 was revised up to 2,300 – though this result was still these industries’ weakest since they shed 7,400 employees in May. But October’s initially reported rise of 4,800 has been upgraded twice – to 7,500 and then to 9,000. And September’s results have been revised from 8,300 to 7,400 and then bsck up to 9,000 – where they’ve remained.

All told, automotive’s jobs numbers are now 5.11 percent higher than in February, 2020, versus the 4.17 percent calculable last month.

RealityChek has also been following several other industries of specical interest during the pandemic era whose results are always a month behind those of the above categories. And on the whole, they expanded job creation modestly in November.

In the semiconductor sector, whose shortages have handicapped so many other industries, and which will now benefit from massive government subdidies aimed at reviving domestic production, head counts rose by 1,200, and revisions were mixed. October’s initially reported increase of 2,300 was downgraded to one of 2,200 – a total that was still the best since June, 2020’s 3,000, during the recovery from the first CCP Virus wave. But September’s figures remained donwardly revised from an initially reported gain of 800 to a loss of 1,000.

The semiconductor workforce is now 6.60 percent larger than in immediately pre-pandemic-y February, 2020, versus the 6.01 percent calculable last month.

Aerospace manufacturers were especially hard hit by the CCP Virus-era travel bans and by individuals’ reluctance to fly. But with normalization returning, these companies’ revived hiring continued on balance in November.

Aircraft makers enlarged their workforce by 300 – a performance that was actually their weakest since they cut 800 positions in January. Revisions were slightly negative, however, with October’s initially reported 3,900 revised down to 3,800 – still the sector’s best such performance since June, 2021’s 4,400 jump. And September’s initially reported advance of 1,300 stayed at a downwardly revised 1,200.

As a result, aircraft employment crept to within 5.77 percent of its immediate pre-pandemic level, versus the 5.85 percent calculable last month.

In aircraft engines- and engine parts-makers, payrolls grew by 500, and revisions were positive. October’s initially reported improvement of 700 was upgraded to one of 800, and September’s 100 job loss has remained unrevised. Employment in these industries has now contracted by 7.42 percent since February, 2020, versus the 8.83 percent calculable last month.

The exceptions to this pattern of stronger November hiring were the non-engine aircraft parts- and equipment sectors. They cut payrolls by 400 in November, and revisions were slightly negative. October’s initially reported gain of 100 was revised down to no change, and Smbeepter’s contraction stayed at 700 after having been downgraded from a loss of 500. These results left employment among these companies off by 14.45 percent during the CCP Virus era, versus the 14.36 percent calculable last month.

The healthcare manufacturers that have occupied the spotlight since the pandemic began generally added jobs in November, too. But the surgical appliances and supplies makers that turn out so many of the products used to fight the CCP Virus weren’t among them.

These companies shrank their workfoce by 800 in November in their weakest performance since identical cuts in June, and revisions were negative on balance. October’s initially reported hiring flatline was revised up to an increase of 600 – their best employment month since they added 900 positions in August. But September’s results have been downgraded to a decline of 300 after having been revised up from an advance of 1,000 to one of 1,200.

These ups and downs left this sector’s workforce just 4.83 percent larger than in immediately pre-pandemic-y February, 2020 –much lower than the 11.64 percent growth calculable last month.

By contrast, the big pharmaceuticals and medicines category boosted employment by 2,200 in November – its best such performance since June’s 4,000. Revisions were positive, too. October’s initially reported increase of 600 (which I erroneously reported last month as a flatline) was downgraded to 500, but September’s advances have been revised up from 200 to 500 to 1,200.

During the CCP Virus era, this sector has upped employment by 12.51 percent, versus the 11.64 percent calculable last month.

Finally, the medicines subsector containing vaccines hired 700 net new workers in November, but revisions were mixed. October’s initially reported gain of 600 was upgraded to one of 900 – the best improvement since the identical addition in June. But September’s results have been revised down from a rise of 500 to one of 300 after having been initially reported as a 200 increase.

Still, employment in this vaccines-centric grouping is now 27.31 percent higher than just before the pandemic hit the United States in force, versus the 26.29 percent calculable last month.

The substantial hiring increases in major industries like automotive and fabricated metals products make it difficult to forecast a significant downturn in manufacturing job creation during the next few months. And the strong job creation in machinery is especially encouraging, since it seems to indicate that companies throughout industry and the rest of the economy are ordering its products in anticipation of continued solid demand from their customers.

At the same time, the chemicals sector also provides inputs for many other industries, and its December job cuts could presage, at a minimum, a softening of activity in manufacturing and beyond. And since it began acknowledging inflation’s seriousness, the Federal Reserve seems as determined as ever to achieve such softening in order bring prices under control.

Right now, the safest bet seems to be that manufacturing job creation stays subdued, and even loses more momentum.

(What’s Left of) Our Economy: New Official Manufacturing Output Figures Add to Recessionary Gloom

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aerospace, aircraft, aircraft parts, appliances, automotive, computer and electronics products, electrical components, electrical equipment, Federal Reserve, furniture, inflation-adjusted growth, machinery, manufacturing, medical supplies, pharmaceuticals, plastics and rubber products, printing, real growth, semiconductors, transportation equipment, wood products, {What's Left of) Our Economy

Yesterday’s Federal Reserve report on U.S. manufacturing production (taking the story through November) tells me that domestic industry’s inflation-adjusted output is rolling over into contraction – and not just because it fell last month for the first time since June. As I’ll spotlight below, it was also disturbing to see multi-month worsts in industries where such output has been remarkably stable lately, and sequential drops in some other sectors that were the biggest since the peak of the CCP Virus pandemic’s hit to the economy in April, 2020.

Production in real terms by U.S.-based manufacturers sagged by 0.62 percent sequentially last month – the first negative read since June’s 0.73 percent drop. Oddly, though, revisions of recent months’ results were slightly to the upside, although hardly stellar.

Still, as a result, since February, 2020, just before the pandemic struck the U.S. economy in force, such manufacturing production is up by 3.07 percent, versus the 3.76 percent calculable last month.

November’s manufacturing output losses were so broad-based that only four of the twenty broad industrial subsectors tracked by the Fed registered any sequential growth at all. They were:

>wood products, which grew by 3.59 percent in price-adjusted terms despite the continuing troubles of the housing industry. Indeed, that was the best such result since March, 2021’s 3.71 percent. But the November increase came after an October decrease of a downwardly revised 3.58 percent that was wood products’ worst month since constant dollar production plunged by 11.02 percent in April, 2020. wave. Other revisions were overall negative, too, but the November pop means that after-inflation wood products output is now up by 0.20 percent since immediately pre-pandemic-y February, 2020, versus being 2.67 percent below calculable last month:

>printing and related support activities, which enjoyed its second straight sequential real output improvement after difficult summer and fall. The sector’s 1.58 percent advance in November followed one of an upwardly revised 2.75 percent in October that was the best such figure since February’s 3.13 percent jump. Other revisions were mixed on balance but the recent growth spurt has brought the industry’s price-adjusted output to within 7.92 percent of its February, 2020 levels versus the 9.37 percent calculable last month; 

>aerospace and miscellaneous transportation equipment, which produced constant dollar production growth of 1.15 percent. Slightly positive revisions helped the sector push its post-February, 2020 output expansion to 26.37 percent in real terms, versus the 26.29 percent> calculable last month; and

>computer and electronics products, where inflation-production production was 0.53 percent higher in November than in October. Yet decidedly negative revisions helped push this diverse category’s real expansion since February, 2020 down to 5.70 percent, versus the 6.32 percent calculable last month.

The biggest November losers among the great majority of broad manufacturing sub-sectors seeing drooping after-inflation production were:

>automotive, whose volatility has shaped so much of manufacturing’s recent fortunes. November’s constant dollar output sank on month by 2.84 percent, the worst such result since February’s 3.81 percent tumble. Revisions were mixed but inflation-adjusted production of vehicles and parts is now 0.46 percent lower since just before the CCP Virus struck in force, versus being 3.18 percent higher as of last month.

>electrical equipment appliances and components, where output slipped 2.41 percent in November. – another post-April, 2020 worst. In addition, an initially reported October increase of 1.92 percent, which was the best such result since February’s 2.29 percent, was downgraded to 0.68 percent. Other revisions were negative as well, which dragged down this diverse sector’s after-inflation growth since February, 2020 all the way down to 2.83 percent, versus the 7.07 percent calculable last month;

>furniture, which experienced a 2.02 percent real output decrease that represented its worst such result since February, 2021’s 2.77 percent. Revisions were negative overall, and in real output terms the furniture industry is now 7.31 percent smaller than in immediately pre-pandemic-y February, 2020 versus the 4.80 percent calculable last month; and

>plastics and rubber products, whose 1.84 percent price-adjusted output slip was another worst since the 18.63 percent nosedive in peak pandemic-y April, 2020. Along with mixed revisions, the November drop depressed real plastics and rubber products output to 0.66 percent below February, 2020 levels versus having been 1.18 percent above as of last month.

The machinery sector is a major bellwether for the rest of domestic U.S. manufacturing and the entire economy because its products are so widely used. In November, its real output dipped for the first time (by 0.23 percent) since June’s 1.94 percent fall-off. Revisions were slightly negative, and inflation-adjusted production of machinery is now 7.53 percent greater than just before the CCP Virus’ arrival in force in February, 2020, versus 8.31 percent calculable last month.

The shortage-plagued semiconductor industry has also been key to domestic manufacturing’s fortunes, and will be receiving mammoth subsidies soon due to Congress’ passage of legislation aimed at boosting its American footprint. So November’s 0.39 percent real output expansion is good news, especially since it was the first increase since June’s 0.79 percent. Revisions were mixed, leaving constant dollar semiconductor output up 12.40 percent since February, 2020, versus the 12.16 percent calculable last month.

Since the pandemic struck, RealityChek has been paying special attention to several other manufacturing sectors that have either been especially hard hit by the pandemic, or that have been especially important in fighting it. Overall, they experienced downbeat Novembers in terms of production.

The exception was aircraft and parts, whose companies were hit so hard by the CCP Virus-related curbs on travel. In November, these companies boosted their after-inflation output by another 1.85 percent. Moreover, October’s initially reported gain of 2.51 percent was upgraded to one of 2.59 percent (the best such performance since April’s 3.01 percent). Other revisions were negative, but inflation-adjusted output in this sector is now 35.82 percent higher than just prior to the pandemic’s arrival in force, versus the 34.14 percent calculable last month.

The pharmaceutical and medicines industry (including vaccine makers) saw real production down by 0.16 percent, the first decline since June’s 0.50 percent. But revisions were positive enough (especially for October) to bring this sector’s real output 18.11 percent above February, 2020’s levels versus the 16.71 percent calculable last month.

Inflation-adjusted production slid by 1.55 percent after inflation for the medical equipment and supplies firms that turn out so many products used to fight the virus. This drop was another instance of a worst such result since peak pandemic-y April, 2020 (15.08 percent). Revisions were mixed, and real output in these industries is still up 13.23 since just before the pandemic. But as of last month, this figure was 15.75 percent.

It’s of course entirely possible that these dreary November manufacturing output results are blips, and that the sector will keep shrugging off bearish predictions. But with U.S. growth seemingly certain to slow down markedly at the least, and global growth already weak, it’s difficult to understand how domestic industry escapes these undertows.

(What’s Left of) Our Economy: U.S. Manufacturing Job Growth is Down, but Don’t Count it Out

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aircraft, aircraft engines, aircraft parts, appliances, automotive, chemicals, electrical equipment, Employment, Federal Reserve, food manufacturing, inflation, Jobs, machinery, manufacturing, paper and paper products, pharmaceuticals, plastics and rubber products, primary metals, semiconductors, surgical equipment, transportation equipment, vaccines, {What's Left of) Our Economy

As shown by the new (for November) official U.S. employment report, domestic manufacturing’s job creation has been so strong since the CCP Virus arrived state-side in force that even one lagging month didn’t change its recent status as a national hiring leader.

That said, Friday’s report on what are called non-farm payrolls (NFP – the U.S. government’s definition of the American jobs universe) also revealed that, as with the entire economy, manufacturing job creation has downshifted in recent months. Whether it will stall out or worse going forward, however, remains a very open question.

Domestic industry upped payrolls by 14,000 sequentially in November – its weakest performance since shedding 28,000 positions in April, 2021. Revisions were positive, but just mildly, with October’s initially reported gain of 32,000 now pegged at 36,000, and September’s increase remaining at a slightly upwardly revised 23,000.

These results are less impressive than those from the first half of this year, when manufacturers boosted employment by a monthly average of nearly 40,000, and three months saw gains of more than 50,000. Yet since February, 2020 – the last full data month before the virus began spreading rapidly and roiling the economy – industry’s employees have increased by 1.17 percent. That’s better than the gain for the private sector overall (1.16 percent) and for the non-farm economy (0.68 percent).

Manufacturing’s share of all private sector jobs and all non-farm jobs did dip in November – from 9.87 percent of the former to 9.86 percent, and from 8.43 percent to 8.42 percent for the latter. But both shares are still higher than in February, 2020 – which were 9.83 percent and 8.38 percent, respectively.

In addition, the November manufacturing employment advance kept its head count at the highest level (12.934 million) since November, 2008’s 13.034 million.

November’s biggest manufacturing jobs winners among the broadest sub-sectors tracked by the U.S. Labor Department were:

>transportation equipment, a big diverse sector that added 6,100 workers. And revisions were nothing less than spectacular. October’s initially reported advance of 4,700 is now estimated as a surge of 13,200. September’s result is now judged as a 6,300 jump after having been revised down from an initially reported 8,400 increase to one of 4,700. And August’s initially reported 2,400 jump was jaw-droppingly upgraded to one of 10,500 and then to a 20,900 burst, which is the final figure for now. This rocket ride has pushed transportation equipment employment to 1.08 percent above the levels of immediately pre-pandemic-y February, 2020 versus the 0.14% calculable last month;

>chemicals, another big, diverse sector which raised employment by 4,700 – its best monthly result since May’s 5,100. Revisions, however, were mixed. October’s initially reported 1,600 increase was revised up to one of 2,200. September’s initially reported rise of 3,400 was downgraded to one of 2,700 but then revised back up to a 3,200 increase. But August’s initially reported gain of 3,500, which was revised up to 3,900, was then downgraded to a final total of 2,700. Still, chemicals payrolls have now climbed by 7.32 percent since the pandemic’s arrival in force, versus the 6.64 percent calculable last month;

>machinery, whose 3,900 net new employees were especially encouraging bothnew because this hiring was the strongest since April’s 5,800, and because this industry’s products are used so widely througout the rest of manufacturing and the entire economy. Even better, revisions were considerably positive. October’s initially reported improvement of 3,000 was upgraded to one of 3,600. September’s initially reported 1,700 decrease (which had been the worst since last November’s 7,000) was revised up to a decline of 300 and then estimated as the same. And after being revised down from 2,800 to 2,200, August’s increase was revised back up to the now final figure of 2,800. Whereas machinery employment was off by 0.90 percent from February, 2020 levels as of last month, it’s now within 0.55 percent; and

>food manufacturing, another big sector, and one that hired 3,400 net new workers. Revisions were mixed here, too. October’s initially reported increase of 1,000 was cut in half, to 500. But September’s initially reported 7,800 pop (the best such performance since February’s 11,100) went unrevised and then was downgraded to a still impressive 7,600. And although August’s initially reported 2,400-job loss was first revised up to one of 1,000, it was then downgraded to a decrease of 2,700, which is where it’s stayed. Food manufacturing’s workforce has now grown by 3.52 percent since the pandemic began hammering the economy, versus the 3.36 percent calculable last month.

The biggest November jobs losers among the broadest manufacturing categories were:

>plastics and rubber products, whose 3,200 employment drop was its biggest since the 4,400 plunge in September, 2021 – and where revisions were negative, except for one that was in the “jaw-dropping” category, too. October’s initially reported increase of 3,000 was revised down to 700. September’s initially reported loss of 1,400 was upgraded to a gain of 600 before being revised way down to a decrease of 2,400. And after being revised down from an advance of 900 to one of 100, August’s job creation estimate soared to 4,400, where it remained Friday morning. But the post-February, 2020 increase in plastics and rubber products jobs fell from the 4.94 percent calculable last month to 3.76 percent;

>electrical equipment and appliances, whose 2,400 monthly employment decrease was the worst since May, 2020’s 6,100. Revisions, moreover, were significantly negative. October’s initially reported net new hiring of 300 is now judged to be a decline of 1,300. September’s initially reported rise of 3,000 has been downgraded twice – to one of 1,300 and then to 1,100. And August’s gains, which were first upgraded from 800 to 1,700, were then revised down to their final figure of 1,200. As a result of these setbacks, the payrolls of electrical equipment- and appliance-makers are now just 2.72 percent higher than in immediately pre-pandemic-y February, 2020, versus the 3.77 percent calculable last month;

.>paper and paper products, whose companies shed 2,000 jobs, their worst performance since the 2,800 drop in April, 2021. Revisions overall were negative. October’s initially reported increase of 900 was revised up to 1,300 (the best such performance since this past April’s 2,100). September’s initially reported rise of 100 was upgraded significantly to 1,200 before being downgraded to an advance of 700. And August’s initially reported loss of 700 was revised up to one of 500 but then downgraded to a 1,000 decline. Employment in this sector is now 1.10 percent lower than in February, 2020 versus the -0.52 percent calculable last month; and

>primary metals, where head counts weakened by 1,700 for the worst such result since the 9,200 nosedive in May, 2020 – as the Virus pandemic was just off its peak. Yet revisions were positive on net. October’s initially reported drop of 200 is now judged to have been a gain of 900. September initially reported decrease was upgraded even more – to an increase of 2,700 – before being revised back down to one of 2,300. And August’s initially reported improvement of 1,400 was downgraded to one of 600 before being upgraded to 900, where it remained today. Primary metals employment is now 3.95 percent lower than just before the pandemic’s arrival in force, versus the 3.68 percent calculable last month.

One industry followed closely by RealityChek throughout the CCP Virus period registered healthy solid employment gains in November. Job numbers in the automotive sector climbed by 1,900, and revisions were dramatically positive. October’s initially reported increase of 4,800 is now judged to have been 7,500. September’s initially reported growth of 8,300 was first downgraded to 7,400 but then revised up to 9,000. And August’s initially reported drop of 1,900 to a jump of 4,000 and then way up to a burst of 12,000 – its final figure for now and the best such result since March’s 18,400. This hiring wave left automotive sector head counts 4.17 percent higher than in immediately pre-CCP Virus February, 2020, versus the 3.54 percent calculable last month.

As known by RealityChek regulars, data for several other industries of special interest since the pandemic era began are always a month behind the figures for these broader categories, and these October results were generally good.

The shortage-plagued semiconductor industry added 2,300 jobs in October, possibly representing an early sign of the major Made in America incentives contained in the recently passed CHIPS and Science Act. The increase was the best since June, 2020’s 3,000, but revisions were only mixed. September’s initially reported advance of 800 is now judged to be a drop-off of 1,000, but August’s initially reported 1,200 increase was revised up to its now final figure of 1,500. Semiconductor industry employment is now 6.01 percent higher than in February, 2020, versus the 5.74 percent calculable last month.

The aerospace industry was hard hit by the pandemic because of all the national and worldwide travel restrictions put in place. In October, however, this sector’s jobs comeback generally continued strongly. Employment by aircraft manufacturers expanded by 3,900 that month, the best such result since June, 2021’s 4,400. September’s initially reported 1,300 increase was taken down a peg to 1,200, but August’s initially reported gain of 1,300 was revised up to 1,700 and left unrevised yesterday morning. As a result, aircraft manufacturing jobs are now 5.85 percent below their immediate pre-pandemic levels, versus the 7.41 percent calculable last month.

Aircraft engines- and engine parts-makers boosted payolls by 700 in October, their best such perfomance since July’s 800. Revisions were negative on balance, with September’s initially reported job decrease of 100 staying unrevised and August’s initially reported increase of 800 downwardly revised to a final figure of 400. Aircraft engines- and engine parts-makers employment consequently closed to within 8.07 percent of its pre-February, 2020 level, versus the 8.83 percent calculable last month.

Non-engine aircraft parts- and equipment-makers hired 100 net new workers in October, and revisions were mixed. September’s initially reported slip of 500 is now judged to have been one of 700 but August’s initially reported jump of 1,100 was revised up to a final figure of 1,300 – the best such result since January’s 1,400. The non-engine aircraft parts workforce is now 14.45 percent smaller than in since February, 2020 versus the 14.36 percent calculable last month.

The surgical appliances and supplies category contains the personal protective equipment, respirators, and other products central to the U.S. response to the CCP Virus, and kept on enlarging its workforce (by 400) in October. Revisions were mixed, as September’s initially reported job decrease of 200 was downgraded to one of 300, but August’s reported gains have been upgraded from.700 to 800 to 900 – the strongest such perfomance since March’s 1,100. Employers in this sector have now increased their workforce by 5.59 percent since just before the pandemic’s economic – and health – impact began to be fully felt, versus the 5.11 percent calculable last month.

The employment total for pharmaceuticals and medicines flatlined in October, and revisions were oveall negative. September’s initially reported employment expansion was revised up from 1,000 to 1,200 – the best since June’s 4,000. But August’s initially reported gain of 1,700 remained at a significantly downgraded 300. The head count in this sector is now 11.64 percent bigger than in immediately pre-pandemic-y February, 2020 versus the 11.58 percent calculable last month.

Finally, the medicines subsector containing vaccines added 600 net new workers in October in the strongest job increase since June’s 900. Revisions, though, were mixed, with September’s initially reported gain of 200 upped to 500 but August’s initially reported 900 increase now estimated at a decrease of 600 – the biggest drop since December, 2018’s 1,100. Vaccine-makers’ payrolls have now swelled by 26.29 percent since February, 2020, versus the 25.58 percent calculable last month.

The confusion surrounding the U.S. economy’s growth prospects for the foreseeable future inevitably create uncertainty about manufacturing’s outlook. As noted in this previous post, many forward-looking indicators look pretty worrisome, but at least through the end of this year, expansion seems to have  been continuing at a healthy rate.

Big questions about the Federal Reserve’s approach to inflation-fighting are also clouding the manufacturing forecast. But what may be especially revealing is that even during the first half of this year, when the economy tumbled into a recession, manufacturing, along with the rest of the private sector kept hiring, and kept reporting a strong desire to fill lots of empty positions. So until some convincing evidence appears that this striking, pandemic-era pattern will change if a slowdown does begin, I’ll be cautiously bullish about manufacturing job creation.

(What’s Left of) Our Economy: Fading Momentum in U.S. Manufacturing Growth?

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aerospace, aircraft, aircraft parts, apparel, appliances, automotive, dollar, electrical components, electrical equipment, exchange rates, exports, Federal Reserve, housing, inflation, machinery, manufacturing, medical supplies, nonmetallic mineral products, petroleum and coal products, pharmaceuticals, printing, semiconductors, wood products, {What's Left of) Our Economy

The big story in the new Federal Reserves manufacturing production figures that were released Wednesday (taking the story through October) was in the revisions. And I don’t mean the revisions for individual industries, which previous Fed reports has shown to be pretty remarkable (to put it diplomatically). It was in the downgrades for the total output of U.S.-based industry adjusted for inflation, which revealed a considerably weaker performance than first estimated.

Domestic industry just barely stayed in growth mode in October, expanding real production by 0.15 percent. But weighing more heavily on the sector’s recent performance, revisions for every month since July were negative.

September’s initially reported price-adjusted gain of 0.43 percent is now estimated to have been 0.24 percent. August’s after-inflation increase – first upgraded from 0.09 percent to 0.38 percent was downgraded to 0.10 percent. July’s initially reported constant dollar advance of 0.72 percent has now been downgraded three straight times – to 0.62 percent, 0,60 percent, and 0.53 percent. And June’s initially reported inflation-adjusted drop of 0.54 percent, after having been revised up to a dip of 0.45 percent, was downgraded three straight times, too – to 0.56 percent, 0.58 percent, and 0.59 percent.

Consequently, U.S.-based manufacturing’s real production increase since February, 2020 – just before the arrival of the CCP Virus sparked assorted mandated and voluntary behavioral curbs and a shot but deep economic downturn – now stands at just 3.76 percent, versus the 4.19 percent improvement calculable last month.

Among the broadest manufacturing sub-sectors tracked by the Fed, the biggest October winners in terms of after-inflation output were:

>the automotive sector, whose volatility has greatly influenced manufacturing’s
overall growth performance throughout the pandemic era. Price-adjusted production of motor vehicles and parts climbed by 2.05 percent on month in October, and revisions were mixed. September’s initially reported increase of one percent was revised down to one of 0.44 percent. August’s initially reported fall-off of -1.44 percent was downgraded to one of 1.48 percent before being revised back up one of 1.07 percent. July’s initially reported jump of 6.60 percent was downgraded to an increase of just 3.24 percent, but then revised up again to 3.57 percent and 3.84 percent. (still the best such performance since September, 2021’s 10.34 percent burst). And June’s initially reported 1.49 percent decrease was upgrade to a decline of 1.27 percent before being downgraded to a loss of 1.31 percent and settling in at a retreat of 1.84 percent

All the same, these gyrations left the automotive industry 3.18 percent larger in real terms since immediately pre-pandemic February, 2020, versus the 0.89 percent increase calculable last month;

>electrical equipment, appliance, and components, where a 1.92 percent increase
in real output in October was its best such performance since February’s 2.29 percent rise. Revisions, however, were slightly negative. September’s initially reported 0.93 percent gain was downgraded to one of 0.63 percent. August’s initially reported 1.01 percent decrease was revised up to one of 0.51 percent before being revised down again to inflation-adjusted growth of 0.81 percent. July’s initially reported -1.41 percent contraction in price-adjusted output has been steadily downgraded to one of 1.44 percent, 1.55 percent, and finally 1.65 percent. And June’s initially reported real growth improvement of 1.34 percent was revised up twice – to 1.42 percent to 1.45 percent, and then held steady before being revised down to 1.37 percent.

After-inflation production in this diverse sector is now 7.07 percent above February, 2020 levels versus the 5.90 percent calculable last month;

>aerospace and miscellaneous transportation equipment, which generated a 1.90 percent sequential inflation-adjusted output increase in October, and registered mixed revisions. September’s initially reported increase of 0.56 percent is now judged to have been a dip of 0.28 percent, and August’s initially reported 2.08 percent rise has been downgraded first to 1.19 percent and now 0.48 percent. But July’s initially reported 1.54 percent constant dollar output increase has been upgraded three times – to 1.85 percent, 2.11 percent, and 2.12 percent. And after a downward revision from a 0.09 percent rise to a 0.14 percent fall, June’s results were upgraded to increases of 0.15 percent, 0.37 percent, and 0.53 percent.

These upgrades were enough to push real aerospace and miscellaneous transportation equipment’s post-February, 2020 price adjusted growth to 26.29 percent, versus the 24.20 percent calculable last month;

>printing and related support activities, a hard-hit industry recently that nonetheless produced 1.90 percent more in October when accounting for inflation than in September – its best such result since e February’s 3.13 percent surge. Yet revisions spoiled the picture to some extent. September’s initially reported decrease of 1.67 percent was downgraded to one of 1.93 percent – its worst monthly shrinkage since January’s 2.09 percent. But August’s initially reported 0.27 percent contraction was significantly upgraded to a gain of 0.59 percent and then to 0.87 percent. July’s results have been revised up from a decrease of 1.67 percent to one of 1.60 percent to one of 1.50 percent to one of 1.27 percent. And June’s estimates have been all over the place – from an initially reported 1.68 percent advance to one of 0.51 percent to a 0.40 percent decline back to a 0.41 rise and then to a 1.04 percent fall.

All told, real output in this sector closed to within 9.37 percent of its levels just before the CCP Virus struck from the 11.81 percent calculable last month;

>apparel and leather goods, which continued a generally good recent run by boosting real output by 1.04 percent on month in October Revisions were positive on net –and in one instance, stunningly so. September’s initially reported 1.56 percent inflation-adjusted production increase was upgraded significantly to 2.29 percent. August’s initially reported -0.53 slip was upgraded all the way up to a 1.85 percent increase and then back down to a 2.81 deterioration. July’s initially reported 1.60 percent advance was revised down to one of 1.46 percent, then back up to one of 1.66 percent, then left unchanged, and then downgraded to a 1.52 percent increase. And June’s initially reported 1.68 pecent increase was downgraded to a 0.51 percent decline, then revised up to a dip of just 0.40 percent, then downgraded to a decrease of 1.04 percent, and then revised all the way back to a 5.84 percent pop – these companies’ best such performance since the 8.04 percent jump in August, 2020, during the economic recovery from the first pandemic wave.

Apparel and leather goods production is now up 5.82 percent in real terms since immediately pre-pandemic February, 2020, versus the 5.39 percent calculable last month; and

>machinery, which RealityChek regulars know is a major barometer of the health of the entire economy, since its products are used so widely by nearly all goods and industries alike. Its constant dollar production climbed by one percent month-to-month in October, but revisions were negative on net. September’s initially reported 0.32 output gain was upgraded nicely to one of 1.41 percent. But August’s initially reported advance of 0.99 percent was upped considerably to 2.64 percent before being downgraded to 1.99 percent. July’s initially reported rise of 0.50 percent was revised up to 0.68 percent and 0.78 percent, but then downgraded to 0.57 percent. And June’s initially reported drop of 1.49 percent was narrowed to one of 1.27 percent before being downgraded to 1.75 percent, 1.83 percent, and 1.93 percent.

Still, the machinery sector has now boosted its real growth since February, 2020 to 8.31 percent, versus the 7.23 percent calculable last month.

Among the broadest manufacturing groupings tracked by the Fed, the biggest inflation-adjusted output losers were:

>wood products, whose fortunes seem to stem from the woes of a housing sector suffering from the central bank’s inflation-fighting interest rate hikes. In real terms, it contracted by 2.54 percent in October – its worst such performance since sinking 3.22 percent in February, 2021. And revisions were negative on balance. September’s initially reported 0.44 percent loss is now judge to have been one of 2.14 percent. August’s initially reported 1.70 percent decrease was revised down to one of 2.36 percent before being upgraded to one of 2.09 percent. July’s initially reported advance of 0.72 percent was turned into a decreases of 0.03 percent, 0.09 percent, and -0.65 over the next three months. And June’s initially reported increase of 0.73 percent was downgraded to 0.42 percent, then to a decrease of 0.62 percent before being revised up to a retreat of just 0.34 percent.

These net setbacks mean that wood products’ real output since the pandemic arrived is now down by 2.67 percent. As of last month, it was up by 1.43 percent;

>nonmetallic mineral products, whose price-adjusted output fell by 1.19 percent
– its worst such showing since April’s 1.52 percent. Revisions overall, though, were positive. September’s initially reported 1.41 percent growth was upgraded to 2.13 percent – the sector’s best such performance since February’s 4.39 percent surge. August’s initially reported vised 0.90 percent decrease was revised up to a 0.22 percent loss and then to a 0.14 percent expansion. July’s initially reported 0.52 percent increase was downgraded to a 0.09 dip, then slightly upgraded to a fractional decline, and to a 0.04 percent decrease. And June’s initially reported 1.07 percent decrease was revised up to gains of 0.48 percent and 0.46 percent, respectively, down to a fractional decrease, and back up to a 0.37 percent increase.

But nonmetalllic mineral products has now expanded its post-CCP Virus arrival real production by just 1.09 percent, versus the 1.48 percent calculable last month; and

>petroleum and coal products, where constant dollar was depressed sequentially by 1.86 percent in October and revisions were mixed. September’s initially reported 1.13 percent rise was upgraded to one of 1.68 percent. August’s initially reported jump of 3.54 percent was revised even higher to 4.13 percent (the strongest since March, 2021’s post-winter storm 11.49 percent) and then back down to 2.77 percent (still the best since that March). July’s initially reported 0.94 percent decrease was upgraded to narrower losses of 0.25 to and 0.23 percent to an uptick of 0.05 percent. June’s initiallyreported 1.92 percent drop was revised down to one of 2.80 percent, to a no-change finding, to a smaller drop of 2.58 percent – still the worst such performance since January’s 2.96 percent retreat.

These results pushed real output by petroleum and coal products businesses 1.14 percent above their February, 2020 levels, lower than the 3.20 pecent calculable last month.

The semiconductor industry, whose supply chain problems have so influenced the fortunes of manufacturing and the entire U.S. and global economies, saw inflation-adjusted production decline by 1.37 percent on a monthly basis in October, and revisions were strongly negative. September’s initially reported after-inflation production gain of 0.45 percent has turned into a 1.07 percent drop. August’s initially reported 0.57 percent decline was slightly upgraded to one of 0.39 percent but now stands as a 1.47 percent retreat (the biggest since April’s 3.14 percent). July’s initially reported 1.16 percent increase has been revised down to a gain of 0.77 percent, and then to losses of 0.02 percent and 0.40 percent. June’s initially reported results were first significantly revised up from a rise of 0.18 percent to 2.09 percent, but have since been downgraded to 0.88 percent to 0.86 percent to 0.80 percent.

In inflation-adjusted terms, semiconductor production is now up by only 12.16 percent since the pandemic’s arrival in force state-side, way down from the 17.29 percent increase calculable last month.

For two manufacturing groupings of special interest during the pandemic era, October brought good growth results. Indeed, in aircraft and parts, real output advanced by 2.51 percent on month – the best such performance since April’s 3.01 percet. Revisions, however, were somewhat negative. September’s initially reported 0.59 percent rise was downgraded to one of a mere 0.05 percent. August’s initially reported 3.11 percent improvement has been revised down twice – to 1.69 percent and 1.48 percent. July’s initially reported 1.02 percent growth was upgraded twice – to 1.52 percent and 1.90 percent – before falling back to 1.85 percent. But after a downgrade from an initially reported 0.26 percent increase to one of 0.18 percent, June’s results have received upward revisions to 0.24 percent, 0.56 percent, and 0.74 percent.

Nonetheless, aircraft and parts’ price-adjusted output is now 34.14 percent greater during the pandemic era versus the 31.18 percent calculable last month.

Pharmaceutical and medicines companies’ (including vaccine producers’) constant dollar production edged up just 0.20 percent in October, and revisions on balance were negative. September’s initially reported 0.64 increase was downgraded to 0.55 percent. August’s initially reported 1.62 percent growth was upgraded to 1.81 percent and then slightly reduced to 1.80 percent. July’s initially reported 0.29 increase was revised up to 0.30 percent, but then downgraded to losses of 0.55 percent and 0.54 percent. June’s initiallay reported 0.39 rise went unchanged before falling to 0.32 percent, and then advancing to 0.43 percent and 0.44 percent.

After these moves, real output of pharmaceuticals and medicines was 16.71 percent higher than since the February, 2020 onset of the U.S. pandemic, versus the 16.56 percent calculable last month.

Finally, medical equipment and supplies firms raised their production in after-inflation terms by 0.32 percent in October, but revisions were significantly negative. September’s initially reported 1.33 percent drop was revised down to one of 1.43 percent – the worst such performance since the 15.08 percent nosedive of peak pandemic-y April, 2020. August’s initially reported rise of three percent was upgraded to 4.40 percent but then revised dow to 2.92 percent – the best such perfomance since January.

These revisions dragged inflation-adjusted medical equipment and supplies output down to 15.75 percent over its level since February, 2020, versus the 17.95 percent increase calculable last month.

As usual, during these last CCP Virus-roiled years, the outlook for domestic manufacturing seems to be subject to numerous crosswinds. The headwinds include continued tightening of credit conditions by the Fed as it tries to reduce inflation by slowing the economy; numerous predictions of a recession next year (see, e.g., here); economic weakness in major foreign markets to which domestic industry sells; and a still strong dollar (which harms the price competitiveness of U.S.-made goods the world over).

The tailwinds include indications of American economic growth that’s actually strengthening; the possibility that the Fed will at least slow the pace of its rate hikes even before it’s sure that inflation is cooling (precisely to avoid a recession, or a deep recession); a loosening of the supply chain snags that appeared once the global recovery from the first CCP Virus wave began; and amped up federal support for domestic semiconductor manufacturing and the continuing (and hopefully quickening) roll-out of projects funded by the 2021 infrastructure bill.

So far, as I keep observing, the nation’s manufacturers have met their challenges admirably.  But those downward revisions have me wondering whether This Time It’s Different – at least for the next few months. 

(What’s Left of) Our Economy: Manufacturing Takes the Recent U.S. Job Creation Lead

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aircraft, aircraft engines, aircraft parts, automotive, computer and electronics products, consumers, Employment, fabricated metal products, Federal Reserve, housing, Jobs, machinery, manufacturing, non-farm payrolls, non-metallic mineral products, personal protective equipment, pharmaceuticals, PPE, private sector, recession, semiconductors, surgical equipment, textiles, transportation equipment, vaccines, wood products, {What's Left of) Our Economy

Maybe the next sets of official figures will show that U.S.-based manufacturing is finally succumbing to a series of formidable obstacles that have been placed in its way recently and not-so-recently: signs of a slowing U.S. economy, a Federal Reserve whose anti-inflation policies seem certain to undercut growth, major troubles in the big export markets so important to domestic industry, a super-strong dollar that harms its price-competitiveness all over the world, and continuing supply chain snags.

Yet as of the October jobs data released on Friday, domestic industry has continued to hire – which is almost always a sign of optimism from the employers with skin in the game.

Domestic industry added 32,000 workers on month in October, and revisions were positive. September’s initially reported gain of 22,000 was bumped up to 23,000. After being revised up from 22,000 to 29,000, the August numbers received another upgrade, to 36,000. And July’s final figure came in at an upwardly revised 37,000.

As a result, manufacturing payrolls are now 1.07 percent greater than in February, 2020, the last full data month before the CCP Virus pandemic began massively weakening and distorting the entire economy. As of last month’s jobs report, the pandemic-era gain had been 0.74 percent.

In fact, manufacturers’ hiring in October was so strong that it moved into the national post-February, 2020 job-creation lead. Employment in the overall private sector has expanded by just 1.03 percent since then, and in the entire American jobs universe – which includes public sector jobs and which the U.S. Labor Department calls “non-farm payrolls” (NFP) – is up only 0.34 percent.

As a result, manufacturing jobs now make up 9.87 percent of all U.S. private sector jobs, versus the immediate pre-pandemic figure of 9.83 percent, and 8.43 percent of all non-farm jobs, versus the 8.38 percent figure in February, 2020.

The October increases, moreover, kept manufacturing employment at its highest level (12.880 million) since November, 2008’s 13.034 million.

October’s biggest manufacturing jobs winners among the broadest sub-sectors tracked by the U.S. Labor Department were:

>the computer and electronics products industries, which boosted employment by 5,400 – its best such perfomance since the 6,300 workers added in June, 2020, early during the strong recovery from the first wave of the CCP Virus.

Revisions overall were mixed, though. September’s initially reported increase of 400 was downgraded to a loss of 500. August’s performance was first downgraded from a 4,500 increase to a 3,600 advance and then back up to one of 4,200. And July’s originally reported ise of 3,300 remained at 4,200 after being revised up to 3,900.

Consequently, computer and electronics employment is now up 1.41 percent since February, 2020, versus the 0.94 percent calculable as of last month. And although the increase seems small, it’s important to remember that these companies only cut headcounts modestly during the deep but short recession brought on by the virus’ first wave and lockdowns and voluntary behavior curbs it sparked;

>fabricated metal products, whose payrolls climbed by 5,200. Revisions were negative on balance. September’s initially reported increase of 6,300 – the best since May’s 6,600 – was revised down to 5,500. August’s improvement, already downgraded from 4,700 to 2,800, was upgraded to 3,100. And after an upgrade from 4,200 to 4,600, July’s increase is now judged to be 4,300.

Yet this big sector’s employment closed to within 1.04 percent of its February, 2020 level, versus the 1.36 percent gap that remained as of last month;

>transportation equipment, another very big group of industries, which expanded headcounts by 4,700 in October. Revisions? They were huge and generally positive. September’s initially reported increase of 8,400 was revised down to 4,700. But August’s figures, which had been upgraded all the way from a 2,400 gain to one of 10,500 saw a near-doubling 20,900 – the best such total since March’s 25,000 burst. July, also massively upgraded from a 2,200 increase to one of 12,600, remained at a further upgraded 13,600.

These revisions were enough to push transportation equipment employment higher than its February, 2020 level for the first time (though by just 0.14 percent). As of last month’s jobs report, these industries’ workforces were still 0.52 percent below; and

>non-metallic mineral products, a smallish sector that made 3,200 net new hires in October, and enjoyed generally positive revisions. September’sinitially reported 1,500 loss was upgraded to one of just 200. August’s original 2,800 gain was revised up a second time – from 3,400 to 4,100. But July’s initially reported 1,000 increase remained at a downwardly revised 700 improvement after being upgraded to 1,100.

October’s biggest manufacturing jobs losers among the broadest sub-sectors tracked by the U.S. Labor Department were:

>wood products, where employment slipped by 900, and revisions were generally negative. September’s initially reported gain of 2,200 – this sector’s best since May’s 3,600 – is now judged to be no gain. August’s initially reported loss of 100, first revised down to one of 600, it now estimated as a fall-off of 2,200 – the worst performance since the 30,200 nosedive in April, 2020, when the pandemic-driven downturn was at its worst. At least July’s initially reported rise of 200 has been upgraded to one of 700 and finally to 1,300.

These setbacks drove wood products jobs levels down from 6.76 percent higher than in immediately pre-pandemic-y February, 2020, to 5.60 percent greater since then;

>textile mills, whose jobs decline of 700 was its weakest such perfomance since the same decline in January. Revisions were slightly positive. September’s initially 500-jobs reduction is now estimated as a gain of 300. August’s initially reported loss of 400 jobs has now been gone unrevised twice, and July’s initially reported decrease of 600 has now gone unrevised three straight times.

Textile mill employment has now shrunk by 6.94 percent since February, 2020, versus the 7.03 percent retreat calculable last month; and .

>textile product mills, which saw an employment dip of 600. Revisions were slight and mixed. September’s initially reported payroll loss of 700 stayed unrevised. August’s initially reported employee decrease of 1,000 was first upgraded to one of 800 but then revised back down to 900 (the worst since an identical contraction in September, 2021). And July’s results, first upgraded to no change and then revised down to a decrease of 100 are now judged as a flat-line.

Still, whereas last month, textile product mill payrolls were down by 6.59 percent versus their numbers just before the pandemic struck, the gap has now widened to 7.22 percent.

Two industries followed closely by RealityChek throughout the CCP Virus period registered good employment gains in October.

The automotive sector saw jobs growth of 4,800 – and that was its worst performance since it shed 14,000 positions in February. As with the broader transportation equipment sector in which it’s placed, revisions were dramatic and generally positive. September’s initially reported increase of 8,300 was revised down to 7,400. But after having been upgraded from a drop of 1,900 to a rise of 4,000, August’s results were then revised all the way up to 12,100 – the best gain since March’s 18,400 surge. And July’s initially reported decrease of 2,200 has been upgraded to an increase first of 3,600 and then to its final figure of 8,400.

These gyrations brought automotive employment 3.54 percent above its February, 2020 levels, as opposed to the 2.33 percent calculable last month.

Machinery, a manufacturing and economy bellwether because its products are so widely used, generated good jobs news in October, too, with net hiring hitting 3,000 – the best such performance since April’s 5,800 increase. September’s initially reported decline of 1,700 (the worst since last November’s 7,000) was upgraded to one of just 300. August’s gains were upgraded to 2,800 after having been revised down from that level to 2,200. But July’s initially reported increase of 3,400 stayed at the 2,800 level estimated after being downwardly revised to 3,300.

Machinery employment has now closed to within 0.90 percent of its level in immediately pre-pandemic-y February, 2020, versus the 1.40 percent shortfall calculable last month.

As known by RealityChek regulars, data for several other industries of special interest since the CCP Virus arrived in force are always a month behind the figures for these broader categories. Unfortunately, their September results varied considerably.

The semiconductor industry, whose shortages have bedeviled numerous other manufacturing sectors (especially vehicle and parts makers), grew headcount by 800 – which seems OK until you realize that this increase was its smallest since March’s 400. Revisions were mixed, with August’s initially reported 1,200 increase upgraded to 1,500; and July’s initially reported 2,300 advance was downgraded to 2,200 (still the best such result since the payrolls jumped by 3,000 in June, 2020, during the first pandemic wave recovery) and then unchanged.

Employment in the sector is now up 5.74 percent since just before the virus’ arrival in force, versus the 5.15 percent calculable last month. But as with the broader computer and electronics products category in which it’s placed, it needs to be remembered that semiconductor makers cut almost no jobs during the height of the pandemic.

Aircraft manufacturers added 1,300 jobs on month in September, and revisions were positive. August’s initially reported 1,300 increase was upgraded to 1,700, and July’s initially reported 2,400 gain remained at an upwardly revised 2,500 – their best such results since June, 2021’s 4,400.

U.S. aircraft manufacturing has been harmed not only by the pandemic-era travel restrictions, but by Boeing’ssafety woes. But the recent increases have pulled employment by these companies to within 7.41 percent of their immediate pre-CCP Virus levels, versus the 8.11 percent calculable last month.

This progress, however, didn’t extend to the rest of the aerospace indsustry. Aircraft engines- and engine parts-makers reduced payrolls by 100 in September – the first decrease since July, 2021’s 200. But the August and July results of job growth of 800 each were left unrevised. (The initial July estimate was 900.)

Payrolls in this sector are now 8.83 percent lower than in February, 2020, versus the 8.62 percent calculable last month.

Non-engine aircraft parts- and equipment-makers lowered their headcounts by an even greater 500, and evisions were mixed. August’s initially reported net new hiring of 1,100 was upgraded to 1,300 (the best such result since January’s 1,400). But July’s initially reported loss of 600 jobs stayed at a downgraded one of 800 (the worst such performance since December’s 900).

Consequently, these companies’ payrolls have now shrunk by 14.36 percent since the pandemic first struck, versus the 14.10 percent calculable last month.

Employment also dipped in the surgical appliances and supplies category, which supplies so many of the Personal Protective Equipment (PPE) and other medical products used to fight the pandemic. But even though the industry cut 200 jobs in September (the first monthly loss since June’s 800), revisions were positive. August’s initially reported gain of 700 was revised up to one of 900 (the best since March’s 1,000), and July’s results, first pegged at a 700 gain, remained at an upwardly revised increase of 800.

Surgical appliances and supplies employment is now up by 5.11 percent since February, 2020, versus the 4.11 percent calculable last month.

Results were mixed as well in pharmaceuticals and medicines. Companies in that category boosted payrolls by 1,000 in September, but revisions were significantly negative. August’s initially reported job growth of 1,700 was downgraded to an increase of 300, and July’s results, first estimated as a gain of 500 positions, remained as a downwardly revised loss of 1,000 – the worst such result since an identical reduction in March, 2019 – before the pandemic.

Employment in this industry is still much higher than just before the pandemic’s arrival, but by 11.58 percent versus the 11.71 percent calculable last month.

And in the medicines subsector containing vaccines, those companies expanded headcounts by 200 in September, but revisions were mixed, too. August’s initially reported 900 jobs increase is now estimated as a loss of 600 (the biggest drop since the 1,100 positions eliminated in December, 2018), but July’s initially reported cut of 200 remained at an upwardly revised decrease of 100.

Up 26.90 percent from February, 2020 levels as of last month, payrolls in this subsector are now 25.58 percent higher.

The short-term employment outlook for U.S.-based manufacturing looks unusually uncertain even by the unusually high standards of an American economy that’s still greatly distorted by the pandemic and pandemic responses.  Reasons for optimism? They include the vast amount of money American households and businesses still have to spend, which should keep propping up domestic demand for American manufactures, the lag between the time when Federal Reserve inflation-fighting tightening began and the time when it starts meaningfully slowing economic activity, and the continued easing of supply chain snags. And the new legislation to revive U.S. semiconductor manufacturing should start generating more hiring in that sector and its suppliers before too long. 

At the same time, pessimists can point to developments like a widely forecast global slowdown bound to reduce foreign demand for U.S. domestic manufactures; manufacturing giant China’s insistence on keeping its Zero Covid policy, which has seriously disrupted both the economy of the People’s Republic and worldwide transportation networks;  and continued high inflation (including for the energy used by U.S.-based industry) that presumably will start giving American spenders pause at some point. (The interest rate-sensitive housing sector, a big user of manufactured products, is already reeling from Fed tightening.)    

So just like the Fed, RealityChek will stay data dependent as it monitors and especially prognosticates on domestic manufacturing’s future.