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

Tags

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. 

Advertisement

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

Tags

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.         

(What’s Left of) Our Economy: U.S. Manufacturing Dispels Recession Fears

Tags

aircraft, aircraft parts, apparel, automotive, CCP Virus, computer and electronics products, coronavirus, Federal Reserve, inflation-adjusted growth, machinery, manufacturing, medical equipment, miscellaneous durable goods, non-metallic mineral products, paper, personal protective equipment, petroleum and coal products, pharmaceuticals, PPE, printing, recession, semiconductors, Wuhan virus, {What's Left of) Our Economy

If the U.S. economy is still in recession, or getting uncomfortably close to one, it seems no one’s told the nation’s manufacturers. Yesterday’s latest figures from the Federal Reserve show that domestic industry expanded its inflation-adjusted output by 0.43 percent on month in September. Moreover, revisions at this 30,000-foot level were modestly positive (as opposed to some for manufacturing sectors which, as you’ll see, were pretty dramatic).

August’s initially reported gain of just 0.09 percent – which seemed to indicate that the sector was heading into a downturn – is now judged to have been one of 0.38 percent. July’s originally reported 0.72 percent advance was revised down slightly again – from 0.62 percent to 0.60 percent. And June’s results were downgraded a third straight time – from an initially reported dip of 0 05 percent to a drop of 0.58 percent.

These new and revised figures pushed real U.S. manufacturing production is up 4.19 percent from 2020 – just before the CCP Virus and assorted mandated and voluntary behavioral curbs sparked a short but scary downturn and touched off waves of distortion that persist to this day. As of last month’s Fed report, industry’s inflation-adjusted production had risen by 3.49 percent during the pandemic period.

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

>apparel and leather goods, whose monthly constant dollar output jumped 1.56 percent. Revisions, moreover were strongly positive. August’s initially reported 0.53 percent downturn was lowered to a slump of 1.85 percent. But July’s results rebounded from a 1.46 percent gain to one of 1.66 percent, after having been revised down from 1.60 percent.

And get a load of the June figures! The initially reported 1.44 percent drop was revised to a boom of 6.09 percent (which would have been the best such increase since August, 2020’s 8.04 percent), then back down to a rise of just 1.46 percent, and finally (for now) back up to a 5.98 percent advance.

Apparel and leather goods’ real output is now 5.39 percent higher than in immediately pre-pandemic-y February, 2020, versus the 4.98 percent calculable last month;

>non-metallic mineral products, where inflation-adjusted production was up 1.41 percent for these companies’ best month since May’s 1.69 percent. Revisions, though, were moderately negative, with August’s initially reported 0.09 percent monthly dip being downgraded to a drop of -0.22 percent; July’s initially reported 0.52 percent increase revised down to a slip of 0.09 percent to a fractional decline; and June’s initially reported 1.07 percent fall-off significantly upgraded to a 0.48 percent increase, then revised down to growth of 0.46 percent, to a fractional decrease.

Still, price-adjusted output in non-metallic mineral products is now 1.48 percent higher than just before the CCP Virus arrived in force, versus the 0.12 percent calculable last month;

>petroleum and coal products, which grew inflation-adjusted output by 1.13 percent in September, and which saw overall positive revisions. August’s initially reported 3.54 percent is now judged to be an advance of 4.13 percent (the strongest since March, 2021’s 11.49 percent). July’s initially estimated 0.94 percent decrease has now been upgraded first to one of 0.25 percent and now to one of 0.23 percent. And June’s results stayed at a significantly downgraded 2.80 percent tumble.

Real output in these sectors is now 3.20 percent higher than in February, 2020, versus the 1.45 percent calculable last month; and

>computer and electronics products, whose constant-dollar production climbed 1.07 percent – now the best growth since February’s 1.20 percent. Yet revisions were negative, as August’s initially reported increase of 1.27 percent (which had been the best since May, 2021’s 2.44 percent) has been downgraded to one of 1.05 percent; July’s initially reported drop of 0.65 percent downgraded to one of 0.68 percent and now to one of 0.89 percent; and June’s results settling in at a 0.45 percent increase after the initially reported 0.21 rise was upgraded to 0.67 percent and then revised down to 0.46 percent.

After inflation production in these industries is now 6.78 percent higher than in that last pre-CCP virus data month of February, 2020 versus the 6.11 percent calculable last month.

September’s biggest price-adjusted growth losers were:

>printing and related support activities, where real output sank by 1.67 percent – its worst such perfomance since January’s 2.09 percent retreat. Just as bad, revisions were negative on net. August’s initially reported 0.27 percent decrease was revised up all the way to a 0.59 percent gain, but July’s loss is now judged to have been 1.60 percent after having been upgraded from on of 1.67 percent to one of 1.50 percent. And June’s initially reported 1.68 increase (then the best such performance since February’s 3.13 percent advance) has been revised since to a decrease of 0.51 percent, 0.40 percent, and 0.41 percent.

Conseqently, this hard-hit sector’s output is 11.81 percent smaller than in February, 2020, versus the 11.02 calculable last month.

>miscellaneous durable goods, the broad category that includes the personal protective equipment and other medical devices used so widely to fight the CCP Virus. Its inflation-adjusted production fell by 1.29 percent in September – the first decrease since March’s fractional dip. Even better, this decline comes off overall positive revisions of already excellent results.

August’s initially reported 1.71 percent increase is now estimated to have been one of 2.86 percent the – best since growth rate since July, 2020’s 5.96 percent, as the economy recovered from the pandemic’s first wave and medical equipment production was prioritiezed. July’s initially reported 1.23 percent improvement was downgraded to one of 0.89 percent and then back up to 0.95 percent, and June’s initially reported 2.25 percent growth stayed at a downwardly revised 0.67 percent following a downgrade to 0.87 percent.

Still, in constant dollar terms, production in this broad category is now 13.78 percent greater than in immediately pre-pandemic-y February, 2020, versus the 13.92 percent calculable last month; and

>paper, where real output in September sank by 0.92 percent. Revisions were mixed, with August’s initially reported 0.80 percent increase (the best such performance since February’s 2.26 percent jump) revised down to 0.69 percent; July’s initially reported 0.64 percent decrease upgraded for a second time, to one of 0.58 percent and now to 0.51 percent; and June’s numbers following a similar pattern, with an initially reported shrinkage of 0.88 percent revised up to losses of 0.62 percent and 0.57 percent, respectively.

Yet paper’s real output is now down by 3.78 percent since just before the pandemic arrived, versus the 2.83 percent worse calculable last month.

Good Septembers were also recorded in two manufacturing sectors of long-time special importance to the economy.

Machinery’s economic role is critical because of how widely its products are used throughout the economy and because its output largely reflects business’ expectations of future demand and growth. So it was good news that this diverse sector’s constant dollar output rose by 0.32 percent in Sept, and that revisions were positive on net.

August’s initially reported 0.99 percent increase (mistakenly reported in my last post as 0.91 percent), which had been the best such growth since April’s 1.97 percent was upgraded all the way up to 2.64 percent! That’s now the best production month since July, 2021’s 2.76 percent. This July’s initially reported 0.50 percent growth was upgraded again – from 0.68 percent to 0.78 percent – but June’s data has been revised down overall from a drop of 1.49 pecent to one of 1.27 percent, and back down to 1.75 percent and 1.83 percent.

These developments have now pushed up machinery’s post-February, 2020 real output to 7.23 percent, versus the 5.07 percent calculable last month.

The automotive sector has greatly influenced the manufacturing production statistics throughout the pandemic era, and its volatility continued in September, with after-inflation output up by one percent. Yet that result followed an August whose production decrease was revised down from 1.44 percent to one of 1.48 percent; a July whose output increase was downgraded from an initially reported 6.60 percent to one of 3.24 percent and now back up to 3.57 percent; and a June whose results have changed from -1.49 percent to -1.27 percent to -1.31 percent to -1.84 percent.

Real vehicle and parts production, however, is now back in the black since February, 2020, now aving risen by 0.89 percent, versus the 0.89 percent slippage calculable last month.

The news also was generally good in September for industries prominent in the news during the CCP Virus era.

Constant-dollar production in the shortage-plagued semiconductor sector rose by 0.45 percent, and revisions overall were mixed. August’s initially reported decline of 0.57 percent (the first in three months) is now judged to have been only 0.39 percent. July’s initially reported 1.16 percent growth has been revised down to 0.77 percent and now a measly 0.02 percent. But June’s initially reported 0.18 percent advance is now judged to have been one of 0.86 percent, after being revised way up to 2.09 percent, and then back down to 0.88 percent.

Real semiconductor production is now 17.29 percent higher since February, 2020, versus the 17.46 percent improvement calculable last month.

Inflation-adjusted production of aircraft and parts grew 0.59 percent in September, and revisions were mixed. August’s initially reported 3.11 percent surge (the best since January, 2021’s 8.61 percent) was downgraded significantly to 1.69 percent. But July’s numbers have been upgraded from an initially reported gain of 1.02 percent to one of 1.52 percent and now to one of 1.90 percent. And June’s initially reported 0.26 percent growth has been revised to a 0.18 percent advance, back up to a rise of 0.24 percent, and again to one of 0.56 percent.

Aircraft and parts production, therefore, has now increased by 31.18 percent since just before the pandemic’s arrival, versus the 30.60 percent rise calculable last month.

Pharmaceutical and medicines companies boosted their real monthly production by 0.64 percent in September, and revisions were mixed. August’s initially reported 1.62 percent improvement (the best since August, 2021’s 1.96 percent) was upgraded to 1.81 percent. But July’s initially reported 0.29 percent increase, which had been revised up to 0.30 percent, is now judged to have been a 0.55 percent loss – the first such setback since February’s 1.35 percent fall). And June’s results have gone from 0.39 percent to unrevised to a gain of 0.32 percent and now a rise of 0.43 percent.

As of last month, phamaceuticals’ and medicines’ after-inflation production level had grown by 16.56 percent since February, 2020.  Now the figure is 16.58 percent.

The lone exception to these good September results was medical equipment and supplies – where the personal protective devices and other pandemic fighting equipment is found. Its 1.33 percent after-inflation production fall-off last month was its first since last December (0.71 percent) and the worst such performance since the 15.08 percent crash dive in April, 2020 – at the height of the CCP Virus’ devastating first wave.

But August’s initially reported three percent increase was revised up to 4.40 percent – the best such result since July, 2020’s 9.84 percent. This July’s initially reported 1.90 percent rise was downgraded to 1.58 percent but then upgraded to 1.69 percent. And although June’s figure was revised down from an initially reported 3.12 percent to 1.01 percent and then to 0.67 percent, it was nudged back up to 0.68 percent yesterday.

These net gains pushed medical equipment and supplies’ real production to 17.95 percent above their February, 2020 levels, versus the 17.81 percent improvement calculable last month.

For what it’s worth, the normally pretty reliable forecasters at the Atlanta branch of the Federal Reserve system believe that the economy has now exited the recession it experienced in the first half of this year, and that will grow at a very respectable 2.9 percent after inflation at annual rates in the third quarter of this year. We’ll find out for sure starting October 27, when the first official read on third quarter growth comes out. But at this point, these new manufacturing production data support the idea that economic expansion is back for the time being – and certainly augur well for domestic industry’s prospects at least for the short term.

(What’s Left of) Our Economy: How Much Longer Can U.S. Manufacturers Keep Adding Jobs?

Tags

aircraft, aircraft engines, aircraft parts, automotive, chemicals, Employment, fabricated metals products, food products, Jobs, Labor Department, machinery, manufacturing, non-metallic mineral products, pharmaceuticals, plastics and rubber products, printing, semiconductors, surgical equipment, transportation equipment, vaccines, {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.

As of the September jobs data released on Friday, however, domestic industry has continued to hire – which is almost always a sign of optimism.

Manufacturers in the United States increased their payrolls by 22,000 on net last month, and revisions overall were positive. The August employment rise was upgraded from 22,000 to 29,000, July’s results were revised up a second time, to 37,000, and the June numbers, originally reported as a gain of 29,000, have been brought down only to 27,000 and finally (for now!) 25,000.

These advances pushed manufacturing headcounts 0.74 percent above their levels in February, 2020 – the last 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 0.52 percent.

Industry’s jobs comeback hasn’t been quite as strong as that staged by the overall private sector (where employment is up by 0.86 percent since February, 2020). But that’s partly because domestic manufacturing lost fewer jobs relatively speaking than the rest of the economy (still dominated by the pandemic-devastated service sector) during the CCP Virus-induced nosesdive.

In addition, with government employment at all levels still down 2.61 percent since February, 2020, manufacturing has added more jobs proportionately than the total U.S. non-farm payrolls sector (NFP – Washington’s definition of the American employment universe) – whose workforce is up by just 0.34 percent during this period.

September’s increase left manufacturing employment at the same share of private sector employment as calculable from August’s jobs report (9.85 percent), and up from its 9.83 percent share just before the pandemic struck in full force. But as a percentage of NFP, manufacturing jobs inched up from the 8.41 percent calculable last month to 8.42 percent – a nice improvement from its 8.38 percent share in February, 2020.

Domestic industry’s employment progress is also evident from historical comparisons. At 12.880 million, its workforce remains the biggest since November, 2008’s 13.034 million. Last month’s initially reported 12.852 million manufacturing workers were the highest figure only since July, 2019’s 12.832 million.

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

>transportation equipment, which added 8,400 workers on month. Revisions, moreover, were strongly positive. August’s initially reported 2,400 growth was upgraded all the way up to 10,500. July’s results have now been revised up from 2,200 to 12,600 to and now 13,600 (the best monthly figure since March’s 25,000 burst). And after having been downgraded from 7,200 to 4,300, June’s final jobs improvement stayed at an upgraded 5,700.

These increases mean that employment in this sector is now down just 0.52 percent since immediately pre-pandemic-y February, 2020, versus the 1.52 percent gap that had remained as of last month;

>food manufacturing, whose hiring of 7,800 net new workers was its best monthly performance since February’s 11,100 rise. Revisions were generally positive, too. August’s initially reported 2,400 job loss is now pegged as a drop of just 1,000. After a downward revision from a 1,800 rise to one of 1,600, July’s increase is now pegged at 5,000. But June’s number was downgraded again – from an initially reported 4,800 increase to one of 3,500 to one of 2,400.

Consequently, employment in food manufacturing is now 3.40 percent higher than in February, 2020, versus the 2.64 percent increase calculable last month.

>fabricated metals products, which continued its hiring tear in September by boosting employment by 6,300 – its best such performance since May’s 6,600. Revisions were mized, though. August’s initially reported gain of 4,700 has been dialed back to 2,800, and after having been upgraded from a 4,200 increase to one of 4,600, July’s job creation is now pegged at 4,300. Along with June’s downwardly revised final result of a 200-job gain, these results brought the sector’s employment to within 1.36 percent of its immediate pre-CCP Virus levels, versus the 1.64 percent calculable last month; and

>chemicals, where the headcount climbed by 3,400 on month in September. Revisions, moreover, were positive, with August’s initially reported increase of 3,500 revised up to 3,900, July’s downgraded 2,900 gain revised back up to 4,100 (the best such result since May’s 5,100), and June’s increase staying at an upgraded 3,900.

This big sector has now expanded its employment since February, 2020 by 6.68 percent, versus the 6.09 percent calculable last month.

The biggest September manufacturing jobs losers among these broad categories were:

>printing and related support activities, which lost 4,000 jobs sequentially in September– its worst monthly performance since the 73,100 catastrophe of April, 2020, during the worst of the pandemic. And revisions overall were negative. August’s initially reported 1,100 payroll increase is now pegged at just 700. July’s initially reported 2,000 employment rise was downgraded a second time – to 400. June’s results, though, were upgraded a second time – from a initially reported 900 jobs decrease to an advance of 100.

But all told, this sector’s workforce has now fallen by 11.11 percent since just before the pandemic hit the U.S. economy in full force, versus the 9.78 percent calculable last month

>machinery, whose 1,700 employment reduction in September was its worst such performance since May’s 800 decline, and especially discourgaging since its products are so widely used throughout the economy. Worse, revisions were negative. August’s initially reported 2,800 jobs increase is now pegged at 2,200, July’s gains have been downgraded a second time – from 3,400 to 3,300 to 2,800. But at least June’s improvement remained at an upgraded 2,400.

Employment in this crucial industry is now off by 1.40 percent since February, 2020, versus 1.15 percent calculable last month;

>non-metallic mineral products, where the workforce sank by 1,500 in September for its worst monthly performance since May, 2021’s 5,300 drop. Revisions, however, were slightly positive. August’s initially reported hiring of 2,800 was revised up to 3,400 – the best monthly increase since last December’s identical total. July’s initially reported advance of 1,000 was revised down to one of 700 after having been upgraded to 1,100. But June’s initially reported employment dip of 400 is now juded to have been an increase of 700.

Yet employment in the non-metallic minerals sector dropped back to 1.47 percent below its February, 2020 levels, versus the 1.05 percent calculable last month; and

>plastics and rubber products, whose 1,400 September jobs decline was its worst such performance since payrolls sank by 4,400 in September, 2021. Revisions were negative, too. The initially reported August increase of 900 is now estimated to have been only 100. After being upgraded from a gain of 1,200 to one of 1,400, plastics and rubber employment is now judged to have retreated 400 in July. And June’s increase stayed at a sharply downgraded 2,400.

Whereas last month’s jobs report showed that employment in this sector had climbed by 4.23 percent during the pandemic era, that figure now stands at 3.65 percent.

Most sectors of special interest since the CCP Virus’ early 2020 arrival turned in good recent hiring numbers.

>The automotive sector, whose employment volatility has influenced many of manufacturing’s monthly employment performances during the pandemic period, boosted its payrolls by 8,300 in September, and overall revisions were exceptionally strong. August’s initially reported job loss of 1,900 is now recorded as a gain of 4,000. July’s results have been revised up from a 2,200 drop to a 3,600 rise to an advance of 8,400 (the best such results since March’s 18,400 jump). And June’s initially reported increase of 2,100 has been modestly downgraded to one of 1,700.

Jobs in vehicle- and parts-making is now 2.33 percent above its February, 2020 levels, versus the increase of 0.44 percent calculable last month.

As always, the most detailed employment data for other pandemic-related industries are one month behind those in the broader categories, but most turned in solid August performances, too.

The shortage-plagued semiconductor industry added 1,200 workers on month in August, and revisions were modestly mixed. July’s initially reported 2,300 increase (the best since June, 2020’s 3,000) was downgraded to 2,200, but June’s totals stayed at a slightly upgraded 1,900.

Semiconductor employment is now 5.15 percent higher than in February, 2020, versus the 4.36 percent calculable last month. But don’t forget: These increases have been held down to an extent by the baseline effect, since semiconductor companies kept hiring modestly on net during the worst of the pandemic.

Aircraft manufacturers hired 1,300 workers in August, and revisions were mixed. July’s initially reported employment increase of 2,400 (the best such performance since June, 2021’s 4,400) was revised up to 2,500, but June’s advance stayed at a downgraded 1,200.

As a result, aircraft manufacturing payrolls closed to within 8.11 percent of their February, 2020 totals, versus the 8.69 percent calculable last month.

Aircraft engines- and engine parts-makers hired 400 new workers in August but revisions were negative. July’s initially reported 900 increase is now estimated at 800, and June’s increase stayed at a downwardly revised 700.

Aircraft engines and engine parts-makers now employ just 8.62 percent fewer workers than in February, 2020, versus the 8.94 percent calculable last month.

The 1,100 August employment increase in non-engine aircraft parts and equipment represented its best monthly performance since January’s 1,400. But revisions here were mixed as well, with July’s initially reported 600 jobs decline now pegged at 800 (the worst such performance since last December’s decrease of 900), but June’s totals stayed at an upgraded 900.

These companies’ payrolls are now 14.10 percent lower than in immediately pre-pandemic-y February, 2020 versus the 14.88 percent calculable last month.

The surgical appliances and supplies category has been in the national spotlight throughout the pandemic era, since it includes personal protective equipment and other anti-virus medical goods. Its August headcount increase totaled 700 and July’s upgrade from 700 new hires to 800 produced its best employment creation month since March’s 1,100. June’s job loss of 800 stayed unrevised, though.

These companies have now boosted their post-February, 2020 workforces by 4.11 percent, versus the 4.36 percent calculable last month.

The large pharmaceuticals and medicines raised employment by 1,700 in August, but revisions were mixed. July’s initially reported job decline of 500 is now judged to be 1,000, but June’s hiring spurt of 4,000 – the industry’s best since the 1990 start of the data series – stayed intact.

These employment ups and downs left job levels in this sector now 11.71 percent higher since February, 2020 versus the 11.32 percent calculable last month.

As for the medicines subsector containing vaccines, it boosted its employees by 900 in August. July’s initially reported 200 job loss was upgraded to one of 100, but June’s improvement stayed at a slightly downgraded 900.

This subsector’s workforce is now 26.90 percent larger than just before the pandemic struck in full force, versus the 25.89 percent calculable last month.

At this point, it’s difficult to imagine domestic industry continuing to overcome the headwinds mentioned in the lead paragraph – at least for much longer. But a few years ago, even keeping in mind the mammoth stimulus poured into the economy recently. it would have been difficult imagining U.S.based manufacturing overcoming a worldwide pandemic, an equally worldwide transport and logistics crisis, a major war in Europe, and raging inflation – not to mention a serious tigthening of credit conditions, aimed at taming that inflation, following decades of super-easy money.

The bottom line seems to be a sector that – like the economy as a whole – is standing on a knife edge, but whose record of resilience lately shouldn’t be forgotten too quickly.

(What’s Left of) Our Economy: U.S. Manufacturing Output Keeps its Head Above Water

Tags

aircraft, aircraft parts, appliances, automotive, CCP Virus, computer and electronics products, coronavirus, COVID 19, electrical components, electrical equipment, fabricated metal products, Federal Reserve, furniture, housing, inflation-adjusted growth, machinery, manufacturing, medical devices, miscellaneous durable goods, petroleum and coal products, pharmaceuticals, real growth, recession, semiconductor shortage, semiconductors, transportation equipment, wood products, Wuhan virus, {What's Left of) Our Economy

Yesterday’s figures from the Federal Reserve showed that U.S.-based manufacturing is still growing – by the barest of margins.

The data, covering August, revealed that domestic industry expanded in inflation-adjusted terms by just 0.09 pecent. Revisions were slightly negative.

As a result, after adjusting for prices, U.S. manufacturing output is 3.49 percent higher than in February, 2020 – just before the CCP Virus and assorted mandated and voluntary behavioral curbs sparked a short but scary downturn and touched off waves of distortion that persist to this day. As of last month’s Fed report, industry’s inflation-adjusted production had risen by 3.69 percent during the pandemic period.

Among the broadest manufacturing sub-sectors tracked by the Fed, the biggest August winners were:

>petroleum and coal products, whose 3.54 percent constant dollar monthly output surge was its best since the 11.49 percent jump of March, 2021, when the industry was bouncing back from the damage inflicted by that winter’s Texas blizzards. Revisions were mixed. July’s originally reported after-inflation drop of 0.94 percent upgraded to one of 0.25 percent. June’s preliminary figure, revised up last month from a real decrease of 1.92 to one of 1.50 percent revised back down to a 2.80 percent decline. But May’s initially reported 2.33 percent constant dollar sequential monthly shrinkage of 2.61 pcerent now standing as a fall of 1.30 percent.

Since immediately pre-pandemic-y February, 2020, inflation-adjusted production by these companies is up by 1.45 percent, versus the 1.27 decrease calculable last month;

>aerospace and miscellaneous transportation equipment, which rose month-to-month by 2.08 percent in real terms for its best such performance since February’s 2.52 percent. Revisions were slightly positive. June’s initially reported 1.54 percent improvement is now pegged at 1.55 percent. June had advanced from a fractional increase to a 0.14 percent dip to a 0.20 percent increase. But May’s results have deteriorated here, too – from an initially reported 0.85 percent decrease to a 1.25 percent drop.

In price-adjusted terms, this cluster is now 24.07 percent larger than in February, 2020, versus the 21.30 percent calculable last month;

>miscellaneous durable goods, a diverse sector containing the personal protective equipment and other medical gear used to widely to fight the CCP Virus saw inflation-adjusted production grow by 1.71 on month in August, its best such performace since last December’s 1.85 percent. Revisions, however, were negative. July’s initially reported 1.23 percent increase was revised down to one of 0.89 percent. June’s results have been downgraded from an advance of 2.25 percent to one of 0.87 percent to the 0.67 percent reported yesterday. And May’s improvement, first estimated at 1.17 percent, is now just to have been 0.63 percent.

Consequently, real production in miscellaneous durable goods has now increased by 13.92 percent since February, 2020, just before the pandemic’s arrival in force, versus the 13.38 percent calculable last month; and

>computer and electronics products, where constant dollar output climbed by 1.27 sequentially for their best month since May, 2021 (2.44 percent). Revisions were slightly negative, July’s results were downgraded from a decrease of 0.65 percent to one of 0.68 percent. June’s initially reported 0.21 percent was upgraded to a 0.67 percent gain before dropping back to one of 0.46 percent. And the initially reported May monthly rise of 0.50 percent is now recorded as a decrease of 0.11 percent.

After-inflation growth in this broad sector is now reported at 6.11 percent since that last CCP Virus data month of February, 2020 versus the 5.93 percent calculable last month.

Not so coincidentally, August’s two worst manufacturing production losers among the biggest manufacturing sub-sectors were closely related to the nation’s hard-pressed housing sector:

>furniture and related products, which suffered it sixth straight monthly price-adjusted production decrease. Moreover, the 2.13 percent shrinkage was the worst since February, 2021’s 2.77 percent. Moreover, revisions were overall negative. July’s initially reported retreat of 1.57 percent was revised up to one of 0.80. percent. But the June losses have been downgraded from one of 0.55 percent to one of 1.33 percent and then to one of 1.87 percent. And May’s initially reported 0.94 percent increase is now judged to have been a 0.96 percent decrease.

The furniture cluster is now 7.30 percent smaller after accounting for inflation since February, 2020, versus the 5.56 percent calculable last month’

>wood products, whose inflation-adjusted production slip of 1.70 percent was its second month-to-month decrease in a row and its worst since April’s 1.89 percent. Revisions were mixed. July’s initially reported 0.72 percent increase is now pegged as a -0.03 decline. June’s initially reported 0.73 percent rise has been revised down to one of 0.42 percent and yesterday to a 0.62 loss. But May’s results have been upgraded from a 2.64 plunge to a decrease of just 0.28 percent.

Whereas last month’s Fed release showed this sector to be 6.79 percent bigger since just before the pandemic began roiling and distorting the economy, this month’s estimates this increase to have been just 2.67 percent;

>automotive, whose roller-coaster ride continued with real output sinking by 1.44 percent in August. Worse, July’s initially reported 6.60 percent monthly production burst was cut by more than half – to an increase of 3.24 percent. June’s initially reported 1.49 percent decrease was first upgraded to one of 1.27 percent but now stands at 1.31 percent. And May’s initially reported 0.06 percent on month real output dip is now judged to have been a decrease of 1.96 percent.

As of last month’s Fed report, inflation-adjusted vehicle and parts production was recorded as being up by 4.73 percent since February, 2020. Now it’s pegged as being off by 0.20 percent; and

>electrical equipment, appliances (also related to housing), and components, whose inflation-adjusted production contraction (1.01 percent) was its second straight. Revisions, though, were overall positive. July’s initially reported 1.41 percent fall-off is now estimated as one of 1.44 percent., but June’s results have been upgraded a second consecutive time – from an advance of 1.34 percent to one of 1.42 percent to yesterday’s 1.45 percent. And although May remained an output loser, the decrease has been upgraded from an initially reported 1.83 percent to one of 1.68 percent (which was still its worst results since December’s 2.48 percent slump).

All told, though, this cluster’s price-adjusted shrinkage since that last pre-pandemic data month of February, 2020 fell to just 4.53 percent, versus the 4.83 percent fall-off calculable last month; and

>fabricated metal products, another volatile industry. After-inflation production was off by 0.95 percent sequentially in August, after improving by a figure of 1.79 percent that was revised down from an initially reported 2.05 percent but was still the best such result since February’s 2.49 percent jump. Other revisions were mixed, with June’s initially reported decrease of 0.83 percent revised down first to one of 1.40 percent and now to one of 1.59 percent, and May’s initially reported drop of 1.16 percent now pegged at just 0.98 percent.

As of last month’s Fed report, fabricated metals products’ constant dollar output had closed to within 0.14 percent of its immediate pre-CCP virus level. Now it’s off by 1.42 percent.

Better news came from the big and diverse machinery sector, which is a bellwether for both the rest of manufacturing and the rest of the entire economy, since so many industries use its products. It grew in real terms sequentially in August by 0.91 percent – its best such result since April’s 1.97 percent. Revisions were mixed. July’s initially reported 0.50 percent increase is now estimated to have been 0.68 percent. June’s results, first downgraded from a 1.14 percent decrease to one of 2.16 percent were revised back up to one of 1.75 percent. And May’s initially reported drop-off of 2.55 percent is now recorded as one of 3.20 percent – the worst since the 18.64 percent nosedive of April, 2020, during the height of the pandemic’s first wave.

Machinery has now grown by 5.07 percent during the pandemic period, versus the 2.82 percent calculable last month.

Interestingly, except for the still-shortage-plagued semiconductor industry, August was a banner output month for the sectors that consistently have made headlines during the pandemic.

Real output of microchips and related products did decrease by 0.57 percent, but the decline was the first in three months. Revisions were negative, though. July’s initially reported 1.16 percent rise has been downgraded to one of 0.77 percent and following a major upward revision from 0.18 percent growth to 2.09 percent, June’s real output now stands at 0.88 percent. But after a massive downgrade from 0.52 growth to 2.24 percent shrinkage, May’s performance is now recorded as a just a 0.72 percent loss.

After-inflation semiconductor production is now up 17.46 percent since pre-pandemic-y February, 2020, versus the 21.98 percent calculable last month.

Aircraft and parts surged by 3.11 percent sequentially in August after inflation, these industries’ strongest such performance since the 8.61 percent burst in January, 2021. Revisions were mixed, as July’s initially reported 1.02 percent real monthly output rise to one of 1.52 percent, but June’s initially reported 0.26 percent advance revised down to one of 0.18 percent and then back up to just 0.24 percent, and May’s initially reported 0.33 percent advance now judged to be have been a 0.47 percent retreat.

Even so, constant dollar aircraft and parts output is up by 30.60 percent since February, 2020, versus the 26.67 percent calculable last month.

In pharmaceuticals and medicines, real production was up month-to-month in August by 1.62 percent, these sectors’ best such performance since last August’s 1.96 percent. Revisions here, too, were mixed. July’s initially reported 0.29 percent increase was bumped up to growth of 0.30 percent. June’s results stayed at a 0.32 percent increase after being downgraded from 0.39 percent. But May’s initial growth figure of 0.35 percent now stands at 1.20 percent after some ups and downs.

Since just before the CCP Virus’ arrival in force, pharmaceuticals and medicines output (including vaccines) is now up 16.56 percent in real terms, versus the 14.69 percent calculable last month.

And medical equipment and supplies firms (including those that make anti-CCP Virus products) boosted their price-adjusted production in August by three percent in constant dollar terms – their best such performance since January’s 3.15 percent. Revisions were negative on net. July’s initially reported inflation-adjusted improvement of 1.90 percent was downgraded to an increase of 1.58 percent. June’s original 3.12 percent real growth figure has now been revised down twice – to 1.01 and 0.67 percent. May’s initial estimate of 1.44 percent real growth is now pegged at 1.36 percent.

Yet real production in this sector is now 17.81 percent higher than in immediately pre-pandemic-y February, 2020, versus the 16.15 percent calculable last month.

At this point, it’s easy to make the case that the headwinds facing domestic manufacturing are stronger than the tailwinds. There’s not only continued tighter inflation-fighting and growth-slowing monetary policies being pursued by the Fed along with mounting evidence that America’s overall economic growth will remain slow at best. There’s the end of the mammoth government deficit spending that’s also supported that growth for so long, and especially during the CCP Virus emergency. And don’t forget the continually darkening outlook for the global economy – and for the export markets on which U.S.-based industry relies significantly (nearly 18 percent of its gross output in 2021 by my calculations).

U.S.-based industry has been resilient since the pandemic arrived, but it wasn’t able to escape the undertow of the domestic and overseas economic downturns it generated. That seems like as good a forecast as any for domestic manufacturing output over the next few months, too.   

(What’s Left of) Our Economy: U.S. Manufacturing Job Creation Enters the Goldilocks Zone

Tags

aircraft, aircraft engines, aircraft parts, chemicals, computer and electronics products, dollar, Employment, exchange rates, exports, fabricated metal products, Federal Reserve, food products, inflation, Jobs, machinery, manufacturing, non-metallic mineral products, pharmaceuticals, recession, semiconductors, surgical equipment, textile product mills, vaccines, {What's Left of) Our Economy

For now, the term “Goldilocks” seems to be an increasingly popular and accurate way to describe the U.S. economy. (See, e.g., here.) As in the Three Bears-y it’s not running too hot (and therefore unlikely to prompt the Federal Reserve to step up its inflation-fighting efforts enough to trigger a recession). And it’s not running too cold (and prompting the Fed to accept current inflation levels for fear of sparking a really deep slump).

So it wasn’t entirely surprising that yesterday’s official U.S. manufacturing jobs figures were pretty Goldilocks-y themselves.

They showed that domestic industry boosted its payrolls on month in August by 22,000 – the smallest amount since May’s 19,000, but still representing growth. Further, the revisions of the solid June and July gains were modestly positive. The former received its second downgrade – from an initially reported 29,000 to 27,000 to 25,000. But the latter was upgraded from 30,000 to 36,000.

As a result, manufacturing employment is now 0.52 percent greater than in February, 2020 – the last full month before the CCP Virus pandemic struck the United States in full force and, along with lockdowns and voluntary behavioral curbs, generated a brief but historic depression. As of last month’s jobs report, manufacturing employment had grown by 0.32 percent during this period.

That’s a slower employment recovery than that staged by the overall private sector (0.68 percent). But U.S.-based industry shed fewer jobs proportionately than the rest of the private economy during that pandemic nosedive.

Moreover, because government employment is still down 2.82 percent since the virus arrived, manufacturing’s job creation has been way ahead of the performance of the non-farm sector (the federal government’s definition of the American jobs universe). That measure’s headcounts have advanced only 0.16 percent.

These results have left manufacturing at the same 9.85 percent of total private sector jobs as last month (and up from its 9.83 percent share in February, 2020), and at the same 8.41 percent share of all non-farm jobs as last month (and up from its 8.38 percent share just before the pandemic economy began).

Another indicator of manufacturing’s relatively strong recent jobs performance – at 12.852 million, its workers’ ranks are at their highest level since November, 2008’s 13.034 million. Last month’s initially reported 12.826 million manufacturing workers were the highest figure only since August, 2019’s 12.827 million.

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

>fabricated metals products, which added 4,700 workers on net last month. And this big sector has been on a hot streak lately. July’s results were revised up from a gain of 4,200 to one of 4,600, June’s unrevised 600 job loss is now judged to be an increase of 200, and May’s robust figures have only been revised down from 7,100 to 6,600.

These companies’ payrolls have now advanced to within 1.64 percent of their immediately pre-pandemic level, versus the 2.04 percent deficit calculable last month;

>computer and electronics products, which contains shortage-plagued semiconductor sector, added 4,500 employees sequentially in August, and revisions were strong. July’s initially reported 3,400 gain is now estimated at 3,900. June’s results rebounded from a downgrade of 2,300 to 2,000 to an upgrade to 2,900. And May’s final (for now) upwardly revised 5,300 increase stayed unchanged.

This sector now employs just 0.96 percent more workers than in February, 2020, versus the 0.41 percent rise calculable last month. But it’s important to recall that computer and electronics firms’ headcounts fell only minimally during the first sharp pandemic downturn;

>the very big chemicals industry, which boosted hiring by 3,500 on month in August. Revisions were somewhat negative but still left good growth in their wake. July’s initially reported improvement of 3,700 was downgraded to 2,900. June’s initial huge upgrade from 1,200 to 4,500 fell back to an increase of 3,900 and May remained at 5,100.

Since February, 2020, chemicals companies have increased employment by 6.09 percent, versus the 5.84 percent calculable last month;

>machinery, which is such a manufacturing- and economy-wide bellwether because its products are used by so many industries. Its firms’ payrolls climbed by 2,800 sequentially in August. Revisions, moreover, were encouraging. July’s initially reported 3,400 improvement was revised down slightly to 3,300. But June’s totals have now been upgraded from 1,000 to 1,600 and now to 2,400. And May’s initially reported monthly drop of 3,200 is now pegged at one of just 800.

Machinery employment is now off by just 1.15 percent since immediate pre-pandemic-y February, 2020, versus the 1.47 percent calculable last month; and

>non-metallic mineral products, whose monthly jobs advance of 2,800 in August was its best such performance since February’s 3,100. July’s initially reported gain of 1,000 was revised up to 1,100. June’s initially reported 400 loss has stayed at an upgraded 700 gain. And May’s totals have settled at an increase of 2,100 as opposed to the 1,900 first reported.

Thanks to its strong August and positive revisions, the non-metallic minerals workforce is now a mere 1.05 percent smaller than in February, 2020, vs the 1.85 percent calculable last month

Manufacturing’s biggest August jobs losers among this same group of broad categoies were:

>food manufacturing, whose August monthly 2,400 jobs decline was its worst such performance since last August’s 2,600. In addition, revisions were negative overall. July’s initially reported 1,800 jobs advance was downgraded to 1,600. June’s initially reported jump of 4,800 has been revised down a second time – to 3,400. And after an upgrade from an increase of 6,100 to one of 7,600, May’s result is now pegged at a 7,000 gain.

Whereas food manufacturing’s employment was calculable as having grown since February, 2020 by 2.86 percent as of last month, now the figure is 2.64 percent; and

>textile product mills, whose payrolls fell by 1,000 in August for their worst such performance since July, 2020’s 2,500 decline. Revisions in this small industry were negligible. July’s initially reported dip of 300 is now judged to be a gain of 100. June’s initially reported decrease of 700 stayed unchanged after being revised up to one of 600, and May’s initially reported 100 monthly job loss has stayed unrevised.

Textile product mill employment has now shrunk by 6.44 percent since February, 2020, versus the 5.51 percent calculable last month.

As always, the most detailed employment data for pandemic-related industries are one month behind those in the broader categories, and their July performances were generally in line with that month’s continued overall manufacturing hiring.

The recent employment upswing in that shortage-plagued semiconductor industry continued in July, as the month’s payroll increase of 2,300 was the best such performance since June, 2020’s 3,000. Revisions were positive, too, with June’s initially reported advance of 1,700 now estimated at 1,900 and May’s total staying at a slightly upgraded 1,000..

Semiconductor employment is now 4.56 percent higher than in February, 2020, on the eve of the CCP Virus-era economy, versus the 3.22 percent calculable last month. And it should be kept in mind that semiconductor companies kept hiring modestly on net during the worst of the pandemic.

The workforces of these companies are now 4.36 percent larger than in February, 2020, versus the 3.69 percent calculable last month.

Most of the aerospace cluster in July kept regaining the unusually large numbers of jobs lost during the pandemic period due largely to the steep CCP Virus-related travel downturn.

Aircraft production companies hired another 2,400 workers that month – their best such performance since June, 2021’s 4,400. June’s initially reported 1,500 employment increase was downgraded to 1,200, but May’s net new job creation remained at an upgraded 1,600.

In all, aircraft manufacturing payrolls advanced to within 8.69 percent of their immediate pre-pandemic levels, versus the 9.64 percent shortfall calculable last month.

In aircraft engines and engine parts, firms added 900 employees on net in July, and although June’s initially reported 800 increase was revised down to 700, May’s results remained at a 900 improvement after being upgraded fom 700.

Aircraft engines and engine parts-makers now employ just 8.94 percent fewer workers than in immediately pre-pandemic-y February, 2020, versus the 9.81 percent deficit calculable last month.

Non-engine aircraft parts and equipment makers stayed jobs laggards, though, as they shed 600 workers in July – their worst such performance since last December’s 900 loss. June’s initially reported jobs gain of 600 was upgraded to a 900 increase, and May’s initially reported growth of 300 remained unrevised for a second straight month. But payrolls in this industry are now 14.88 percent below their February, 2020 levels, versus the 14.62 percent calculable last month.

Most healthcare manufacturing, however, experienced an off month hiring-wise in July.

In surgical appliances and supplies (which includes all the personal protective equipment and other medical goods so widely used to fight the CCP Virus), 700 net new jobs were created in July. June’s 800 net job loss stayed unrevised July, as did May’s slightly upgraded monthly increase of 500.

Since February, 2020, this sector’s headcount is up by 4.36 percent, versus the 3.69 percent calculable last month.

Yet the large pharmaceuticals and medicines industry lost 500 jobs in July – although this dip followed a downwardly revised 4,000 employment surge in June that was still the best monthly result for the sector going back to the 1990 start of this data series. Moreover, May’s upwardly revised employment increase of 1,200 remained the same.

Still, whereas employment in this sector was up by 11.58 percent since the pandemic’s economy-shaking arrival as of last month’s jobs report, that increase had slipped to 11.32 percent as of this month’s release.

And the medicines subsector containing vaccines lost 200 jobs in July, and revisions were slightly negative. June’s initially reported 1,100 increase was downgraded to one of 900, and May’s slightly upgraded 700 monthly gain stayed unchanged.

Vaccine manufacturing employment has still climbed by 25.89 during the CCPVirus period. But as of last month, this figure was 26.29 percent.

For the foreseeable future, industry’s employment prospects seem likely to be buffeted by the same crosswinds it’s been dealing with for many months now – on the one hand, ongoing (but possibly fading) supply chain issues, high (but possibly fading) inflation, and a Federal Reserve evidently bent on cooling price increases even if it slows economic growth considerably; on the other hand, demand for manufactures by consumers and businesses that keeps displaying impressive strength.

And let’s not forget a U.S. dollar that’s the strongest in decades, and that should be undermining domestic manufacturing because it still relies so heavily on exports, and the greenback’s rise damages the price competitiveness of everything made in America.

Yet U.S.-based manufacturers keep hiring – usually a sign of confidence – and I’ll keep assuming that since it’s their fortunes that are most directly on the line, I’ll view their prospects as pretty bright, and even Goldilocks-y, too.  

(What’s Left of) Our Economy: An Up-Side Surprise for U.S. Manufacturing Output

Tags

aircraft, aircraft parts, apparel, appliances, automotive, CCP Virus, coronavirus, COVID 19, electrical components, electrical equipment, fabricated metal products, Federal Reserve, furniture, machinery, manufacturing, medical devices, pharmaceuticals, printing, recession, semiconductors, transportation equipment, {What's Left of) Our Economy

Just as it’s looking like the U.S. economy as a whole may have skirted the danger of a near-term recession, domestic American manufacturing saw a revival of its fortunes last month, according to yesterday morning’s latest official report on its after-inflation output in July.

Following two consecutive months of falling real production, U.S.-based industry grew by 0.74 percent in price-adjusted terms sequentially last month – its best such performance since March’s 0.74 percent. Revisions were mixed but modest.

These new figures mean that constant dollar U.S. manufacturing output is now 3.69 percent greater than in February, 2020, the last month before the CCP virus and assorted mandatory and voluntay burbs on economic behavior triggered a steep but brief recession and began distorting the economy. As of June’s release, domestic manufacturing had grown by an inflation-adjusted 2.98 percent since then.

Among the broadest manufacturing sub-sectors tracked by the Fed were:

>the automotive industry, whose volatility fueled many of U.S.-based manufacturing’s ups and downs earlier during the pandemic, boosted its real output by 6.60 percent on month – and this burst was only its best such result since March’s 9.04 percent. Revisions here were generally negative, with June’s initially reported monthly loss of 1.49 percent revised up to one of 1.27 percent, but May’s results downgraded again to a drop of 1.92 percent, and April’s originally reported gain of 3.92 percent is pegged at 2.98 percent. All told, though, vehicle and parts production -though still dealing with semiconductor shortages – once again rose back above its immediate pre-pandemic level by 4.73 percent. As of last month, it was still down by 1.07 percent;

>fabricated metal products, which lifted real output on month in July by 2.05 percent – its best such result since February’s 2.49 percent. Revisions were mixed, with June’s initially reported decline of -0.83 percent now estimated as a decrease of 1.40 percent, May’s initially reported shrinkage of 1.16 percent downgraded further to a 1.18 tumble before being upgraded to one of 1.02 percent, and April’s initially 0.85 percent rise previously revised down to a 0.46 percent advance before recovering to one of 0.65 percent. Inflation-adjusted production in this sector has now come to within 0.14 percent of its February, 2020 levels, as opposed to 2.11 percent below them calculable last month;

>aerospace & miscellaneous transportation equipment, where constant dollar production jumped 1.54 percent month-to-month, and where revisions were mixed, too. June’s initially reported fractional improvement is now judged to have been a dip of 0.14 percent, May’s advance estimate of a 0.85 percent decrease bouncing back from a downgrade to a 1.25 percent drop to one of 1.05 percent, and April’s initially reported 2.15 percent increase getting upgaded to one of 3.47 percent before settling back to one of 3.34 percent. In after-inflation terms, this cluster of industries is 21.30 percent bigger than just before the CCP Virus’ arrival in force, versus the 19.47 percent calculable last month; and

>apparel and leather goods, which recorded a second straight excellent growth month. July constant dollar production increased on month by 1.60 percent, and June’s initially reported 2.54 percent surge was revised all the way up to 6.09 percent – its best such result since the 8.04 percent recorded in August, 2020, when the economy’s recovery from the first virus wave was still underway. But May’s initially reported 0.88 percent price-adjusted output rise was revised down a second time – to a 0.24 percent dip. And April’s advance figure, a 0.18 percent climb, is now estimated to have been a 0.43 percent decrease. Still, thanks to the last two months’ results, this long-beleaguered sector has now grown in real terms by 5.71 percent, as opposed to the 0.56 percent calculable last month; and

July’s worst performing of the major sub-categories tracked by the Fed?

>printing and related support activities, where price-adjusted production sank by 1.67 percent on month. Revisions overall were positive, with June’s first reported loss of 2.16 percent revised up to one of 0.51 percent, May’s advance estimate of a 0.35 percent retreat upgraded a second time, to one of only 0.09 percent, and April’s initially reported 0.49 percent gain now standing at 0.69 percent. All the same, this group of companies still 10.50 percent smaller in real terms than it was in February, 2020, versus the11.37 figure calculable last month;

>furniture and related products,where real output sagged by 1.57 percent sequentially, the worst such result since the 2.77 percent decrease in February, 2021. Revisions on the whole were just as bad, with June’s initially reported fall-off of -0.55 percent now judged to have been one of 1.33 percent, May’s initially reported 0.94 increase (the biggest since this past February’s 4.75 percent pop) revised down second time to ai 0.99 decrease, and April’s initially reported -0.59 percent drop now pegged at a slightly smaller one of 0.41 percent. These results dragged down the furniture complex’s performance down to a 5.56 percent inflation-adjusted output shrinkage since immediately pre-pandemic-y February, 2020, versus a 0.91 percent decline calculable last month; and

>electrical equipment, appliances and components, where after-inflation production was off 1.41 percent from June’s levels. Revisions, though, were on the whole positive. June’s originally reported production increase of 1.34 percent was revised up to 1.42 percent (the best such performance since February’s 2.29 percent), May’s downgrade from an advance decrease of 1.83 percent to one of 2.35 percent was upgraded to a 1.93 percent retreat, and April’s initially reported -0.60 percent drop is now judged to have been a 0.57 percent advance. Yet constant dollar production in this cluster is now up only 4.83 percent over its last pre-pandemic reading, versus the 5.59 percent figure calculable last month.

As known by RealityChek regulars, the very big and diverse machinery sector is seen as a bellwether for both the rest of manufacturing and the rest of the entire economy, since so many industries use its products. So it’s encouraging to report that in July its companies notched their first monthly real output gain (0.50 percent) since April. Revisions, however, were overall sigificantly negative terrible. June’s initially reported 1.14 percent decrease is now pegged at 2.16 percent, and May was downwardly revised again to a 3.53 percent loss (the sector’s worst since the 18.64 percent collapse in April, 2020, during the worst of the economy’s pandemic-induced downturn). Only April broke the pattern even somewhat. Its initially reported 0.85 percent price-adjusted sequential output rise was upgraded all the way to 2.27 percent in May. It’s been downgraded since, but still stands at a 1.88 percent advance (the best since January’s 1.95 percent.

These results mean that wherewas last month, inflation-adjusted machinery production was up 4.70 percent during the pandemic era, now it’s only 2.82 percent higher.

The industries that consistently have made headlines during the pandemic performed well in July, too.

Measured in constant dollars, production by aircraft- and aircraft parts-makers was up 1.02 percent on month, but revisions were modesty negative. June’s initially reported after-inflation output growth of 0.26 percent is now pegged at only 0.18 percent, and May’s real production was unchanged at down 0.23 percent after having been downgraded from a 0.33 percent improvement. After having been upgraded twice, from an initially reported 1.67 percent advance to one of 3.13 percent, the April results dipped to a 2.96 percent rise. But this was still the best monthly result since January, 2021’s 8.60 percent surge). Nonetheless, the aircraft and parts sector is now 26.67 percent larger in real terms, since February, 2020 – up from the 25.58 percent figure calculable last month.

In the big pharmaceuticals and medicines industry, real production climbed on month by 0.29 percent n July and revisions were generally positive. June’s initially reported 0.39 percent increase was slightly downgraded to 0.32 percent, but after having its initially reported 0.42 percent increase was revised down to only 0.01 percent, it was upgraded all the way to a 1.20 percent improvement. And April’s initially reported -0.20 percent after-inflation monthly production dip was revised up a third time to a 0.08 percent increase. Due to these results, real output of aircraft and parts has now grown by 14.69 percent during the pandemic period, versus the 12.98 percent calculable last month.

Medical equipment and supplies firms (who make so many of the products used to fight the CCP Virus) enjoyed a banner July, expanding after inflation by 1.90 percent – its best such result since January’s 3.15 percent jump. June’s initially reported from 3.12 percent rise was downgraded to one of 1.01 percent, but after a downward revision from 1.44 percent real growth to 1.01 percent, May’s results wee revised back up to 1.66 percent, and after two straight upward revisions and one downward, April’s final (for now!) result is now judged to be 0.44 percent growth. But this cluster’s virus era inflation-adjusted production growth now stands at 16.15 percent versus the 17.27 percent calculable last month.

For the shortage-plagued semiconductor industry, price-adjusted output improved on month in July by 1.16 percent. Revisions were positive – but all over the place. June’s initially reported 0.18 percent rise is now pegged at 0.49 percent. But after a massive downgrade from 0.52 growth to 2.24 percent shrinkage, May’s performance is now recorded as a 0.37 gain. And the April sequential results are now as follows: down 1.85 percent, down 0.88 percent, down 2.71 percent, and down 2.68 percent – still the worst production month since the 11.26 percent plunge in December, 2008 – in the middle of the Great Recession that followed the global financial crisis. After all this movement, though, constant dollar semiconductor production is now up 21.98 percent since pre-pandemic-y February, 2020, up dramatically from the 15.22 percent calculable last month.

Even by pandemic-era standards, the outlook for domestic manufacturing looks unusually murky to me. The reasons for pessimism abound (like the near certainty of more growth-slowing monetary tightening by the Federal Reserve in order to tame inflation, darkening growth prospects in all of export-heavy manufacturing’s foreign markets, and continuing supply chain woes, industry’s still ginormous trade deficit). But so do reasons for (cautious) optimism (like U.S. unemployment at 50-year lows and all the personal spending this level supports, the chance that the Fed will ultimately chicken out in its anti-inflation campaign, and the ongoing fade of the pandemic).

Moreover, and maybe most important, all recent bets so far against U.S.-based manufacturing’s resilience have been losing bets. Unless you think that the nation’s manufacturers have suddenly lost their chops, or are about to, it’s reasonable to suppose that, at least for now, they remain horses worth riding.       

(What’s Left of) Our Economy: Slower Growth and More Hiring in U.S. Manufacturing, Too

Tags

aerospace, aircraft, aircraft engines, aircraft parts, CCP Virus, chemicals, coronavirus, COVID 19, electronics products, Employment, fabricated metal products, furniture, Jobs, machinery, manufacturing, medicines, miscellaneous durable goods, non-farm jobs, non-farm payrolls, paper, paper and paper products, pharmaceuticals, recession, semiconductors, surgical equipment, textiles, vaccines, {What's Left of) Our Economy

When it comes both to the U.S. economy in general and domestic manufacturing in particular, this morning’s official jobs report (for July) strongly supported a widely held supposition of economists – that employment is a lagging indicator of trouble.

That’s because laying off workers supposedly is seen as a last resort by businesses facing bad times, and the new results for non-farm payrolls (the U.S. government’s definition of the national jobs universe) seems to have validated this view in spades. Even though the economic growth has been slowing dramatically from last year’s rapid pace, employers boosted their headcounts by a stunning 528,000 last month (including 471,000 in the private sector). And even though inflation-adjusted American manufacturing production has fallen for the last two data months (May and June – the July results will come out August 16), U.S.-based industry added workers for the fifteenth straight month.

Indeed, July’s 30,000 increase in manufacturing jobs was the biggest monthly gain since April’s 61,000. And the numbers included the best hiring month of all time (or at least since that data series began in 1990) for the big pharmaceuticals and medicines industry. Moreover, revisions left the solid results of June and May virtually unchanged.

As a result, domestic manufacturing employment is 0.32 percent higher than its level in February, 2020 – just before the CCP Virus struck the U.S. economy in force and sent economic activity spiraling downward. Last month, when it finally regained its pre-pandemic jobs levels, the net gain was 0.09 percent.

Since July’s overall jobs improvement was so great, manufacturing is no longer the economy’s post-pandemic employment champion. That title has passed again to the total private sector, where payrolls are now 0.49 percent higher than in February, 2020. But manufacturing’s net job creation pace continues to exceed that of the non-farm economy (which includes the public sector). Its workforce is just 0.02 percent larger than just before the pandemic’s arrival.

The huge July surge in non-farm and private sector net hiring did depress manufacturing’s share of those workforces – from 9.86 percent of private sector jobs to 9.85 percent, and from 8.42 percent of non-farm jobs to 8.41 percent. But manufacturing employment is still up in relative terms since February, 2020 – climbing from 9.83 percent of private sector employment and 8.38 percent of non-farm employment.

Job-creation winners abounded throughout manufacturing’s major sectors in July, with the standouts being:

>fabricated metals products, where payrolls grew by 4,200. Revisions, however, continued to be weak, with June’s sequential loss remaining at 600; May’s originally reported 7,100 surge revised lower first to 6,900 and now to 6,600 (still the best since February’s 9,300 pop); and April’s results staying at a twice downgraded 1,400. Employment in this big sector is now 2.04 percent below its immediate pre-pandemic levels, versus the 2.31 percent shortfall calculable last month;

>miscellaneous durable goods (the major category containing many of the key medical devices used to combat the virus), which added 3,700 workers in its strongest monthly performance since last November’s 10,400. But revisions were on balance negative here, too, with June’s initially reported 2,400 job growth now judged to have been 1,700, May’s initially upgraded 1,300 advance downgraded to 1,000, and only April’s results breaking the pattern, with its upgraded 600 job loss staying unchanged.

Miscellaneous goods’ workforce is now 2.79 percent higher than in February, 2020, versus the 2.36 percent calculable last month;

>chemicals, which remained on a hot streak last month. Its companies added 3,700 employees on month in July, its June performance was revised way up from a 1,200 improvement to 4,500, its initially downgraded May rise upgraded to 5,100 (the greatest improvement since January’s 5,500), and April’s increase settling at 1,700 after being first reported as 1,000. As of July, 5.84 percent more workers were employed in the chemicals industry than in February, 2020, versus the 4.83 percent calculable last month; 

>machinery, which RealityChek regulars know is a bellwether for the rest of manufacturing and the whole economy because of how widely its products are used. Its employment increased by 3,400 on month in July; June’s initially reported 1,000 rise is now pegged as 1,600; May’s initially reported 3,200 job decrease has now ben revised all the way up to a jobs gain of 200; and April’s final total stayed at a twice downgraded 5,800. Consequently, machinery employment has rebounded to within 1.47 percent of its immediate pre-pandemic level, versus the 2.05 percent shortfall calculable last month; and 

>computer and electronics products, which contains shortage-plagued semiconductor sector, also boosted its employment by 3,400 sequentially in July. June’s initially reported 2,300 net new job creation is now judged to have been 2,000, but May’s totals were revised up a second time, to 5,300 (its best monthly performance since the 6,300 recorded in May, 2020, during the economy’s strong bounceback from the first CCP virus wave), and April’s thrice upgraded figure remained the same at 4,900. This progress pushed headcounts in this sector 0.41 percent above their February, 2020 levels, versus the 0.11 percent calculable last month.

The worst performers among July’s few maufacturing losers:

>paper and paper products, where employment fell month-to-month by 1,200. At the same time, June’s initially reported 1,200 job increase was upgraded to 1,500; May’s advance was revised down but still remained at an increase of 700; and April’s initially downwardly revised 1,300 employment rise stayed at an upwardly revised 2,100 increase. Nonetheless, there are now 0.86 percent fewer jobs in paper and paper products compared with February, 2020, versus the 0.22 percent dip calculable last month;

>textile mills, whose July employment was off by 600. Revisions were mixed, with June’s initially reported jobs bump of 700 now judged to have been 300, but May’s initially reported payroll decrease of 700 now upgraded to a loss of 400, and April’s upgraded 800-job increase remaining the same. Since just before the pandemic arrived,, however, textile mill jobs have shrunk by 6.18 percent, versus the 5.15 percent calculable last month; and

>furniture and related products, where headcounts sank by 600 on month. Worse, revisions on balance were decidedly negative. June’s initially reported employment improvement of 100 is now considered to be a drop of 1,100; May’s results, first reported as a 1,000 jump, were downgraded a second time to a mere 100 advance; and April’s initially reported 1,100 drop have been revised up only to 900 job loss. Whereas as of last month, the furniture complex’s workforce had risen to 0.60 higher than its February, 2020 level, it’s now sunk back to 0.03 percent lower.

As always, the most detailed employment data for pandemic-related industries are one month behind those in the broader categories, and most turned in performances even better than manufacturing as a whole.

The semiconductor industry is still struggling with the aforementioned shortages that are hampering so many other parts of the economy. But the 1,700 jobs it added on month in June were the most since the 1,800 in January, 2019, and revisions were positive. May’s initially reported 800 jobs gain is now pegged as having been 1,000 and April’s first reported 100 increase has been upgraded more than ten-fold – to 1,100.

The upshot seems to be that the recent high profile announcements of new domestic microchip fab construction are showing up in the employment data. As of last month, the sector’s payrolls were only 2.20 percent higher than just before the pandemic’s large-scale onset (though in fairness, semiconductor employment actually rose during the steep 2020 downturn). As of today, however, employment is up 3.22 percent during that period. (Note: The 1,400 semiconductor job growth I said last month took place in December, 2021 in fact came in the previous December. Apologies for the error.)

In surgical appliances and supplies (which includes so many of the personal protective equipment and other medical goods so widely used to fight the CCP Virus), June employment dropped by 800 – these companies’ worst monthly performance since last July’s 1,100 decline. At least revisions were positive. May’s initially reported gain of 400 is now estimated at 500, and April’s figure stayed at an upgraded loss of 100. The surgical appliances and supplies sector now employs 3.69 percent more workers than in February, 2020; last month, this increase had been 4.36 percent.

The pharmaceuticals and medicines industry, by contrast, generated record-smashing net job creation in June. The 4,300 rise was the biggest monthly total ever in a data series that goes back to 1990, and greatly eclipsed the old mark of 3,200 recorded in September, 2019. Revisions, moreover, were excellent, with May’s initially reported 100 payroll decline now raised all the way up to a 1,200 gain, and April’s increase remaining at an upgraded 1,500. Headcounts in these businesses are now 11.58 percent higher than just before the pandemic, versus the 10.10 percent calculable last month.

The much smaller medicines subsector containing vaccines performed well on the jobs front, too, hiring 1,100 net new workers in June. In addition, May’s initially reported 600 increase is now judged to have been 700, and April’s monthly improvement stayed at 1,100. This subsector’s workforce has now expanded by 26.29 percent since just before the pandemic arrived in force, as opposed to the 24.47 percent calculable last month.

An aerospace cluster hit especially hard by CCP Virus-related travel restrictions experienced another robust employment month in June.

Aircraft companies hired 1,500 net new workers on month, and revisions were excellent as well. May’s initially reported net new hires figure was upgraded from 1,300 to 1,600 – their best such performance since last June’s increase of 4,400 (mis-reported last month as a rise of 4,000). And April’s advance remained at an upgraded 500. As a result, the aircraft workforce is only 9.64 percent smaller than just before the pandemic arrived, versus the 10.30 percent calculable last month.

Aircraft engines and engine parts jobs were up by 800 sequentially in June, May’s initially reported increase of 700 was revised up to 900, but April’s results stayed at a downwardly revised 800. This improvement enabled employment at these firms to come within 9.81 percent of their February, 2020 levels, versus the 10.91 percent calculable last month.

These increases were mirrored in the non-engine aircraft parts and equipment industry, which added 600 workers on month. May’s initially reported 300 jobs increase remained unrevised as did April’s upgraded 400 increase. The non-engine aircraft parts and equipment sectors, as a result, crept to within 14.62 percent of their employment levels of February, 2020, versus the 15.14 percent calculable last month.

The big questions for American workers, and domestic industry as a whole including manufacturing, are whether economic growth will really continue to deteriorate further (here’s a recent forecast that it won’t, at least in the third quarter); and if it does, will businesses continue to “hoard” labor. Let me know if there’s anyone you trust to provide accurate answers.

(What’s Left of) Our Economy: A Second Straight Month of Production Shrinkage for U.S. Manufacturing

Tags

aircraft, aircraft parts, apparel, appliances, automotive, CCP Virus, China, coronavirus, COVID 19, dollar, electrical components, electrical equipment, exchange rates, Federal Reserve, fiscal policy, inflation, inflation-adjusted growth, machinery, manufacturing, medical devices, medicines, metals, miscellaneous durable goods, monetary policy, personal protective equipment, petroleum and coal products, pharmaceuticals, production, real output, recession, semiconductor shortage, semiconductors, stimulus, supply chains, textiles, Trade Deficits, Wuhan virus, Zero Covid, {What's Left of) Our Economy

Yesterday’s after-inflation U.S. manufacturing production report (for June) marked a second straight decline in real output for domestic industry, adding to the evidence that this so far resilient sector is finally suffering the effects of the entire economy’s recent slowdown.

Another possible implication of the new downbeat results: The record and surging trade deficits being run in manufacturing lately may finally be starting undermine U.S.-based manufacturing’s growth. (See here for how and why.)

Also important to note: This release from the Federal Reserve incorporated the results of both typical monthly revisions but also its annual “benchmark” revision, which reexamined its data going back several years (in this case, to 2020), and updated the figures in light of any new findings.

And the combination has revealed some big surprises – notably that the domestic semiconductor industry, which along with its foreign competition has been struggling to keep up with recently booming worldwide demand, has turned out fully 36 percent less worth of microchips on a price-adjusted basis since the CCP Virus struck than was calculable from the (pre-revisions) May report.

In real terms, U.S.-based manufacturing shrank by 0.54 percent on month in June – the worst such result since last September’s 0.78 percent drop. Moreover, May’s originally reported 0.07 sequential percent dip is now judged to be a decrease of 0.52 percent.

The April results remained good, but were downgraded a second time, from 0.75 percent monthly growth in after inflation to 0.66 percent, while the March numbers told a similar story, with a third consecutive modest downward revision still leaving that month’s inflation-adjusted expansion at 0.76 percent.

Especially discouraging, though – the June report plus the two revisions left constant dollar U.S. manufacturing output just 2.98 percent greater than just before the pandemic struck the economy in full force and began distorting it, in February, 2020. The pre-benchmark revision May release pegged its virus-era real growth at a much higher 4.94 percent, and the first post-benchmark number was 4.12 percent.

May’s biggest manufacturing growth winners among the broadest manufacturing categories tracked by the Fed were:

>the very small apparel and leather goods industry. Its price-adjusted output surged by 2.54 percent month-to-month in June – its best such perfomance since May, 2021’s 2.63 percent. May’s initially reported 0.88 percent gain was revised down to a 0.34 percent loss, though. April’s upgraded 0.30 percent rise is now judged to be a 0.33 percent decrease, and March’s figures were revised down after two upgrades – from 1.54 to a still solid 1.30 percent. But whereas last month’s Fed release showed inflation-adjusted production in this sector up 4.59 percent during the pandemic era, this growth is now pegged at just 0.56 percent; 

>the miscellaneous durable goods sector, which contains the medical products like personal protective equipment looked to as major CCP Virus fighters. It’s June sequential output jump of 2.25 percent was its biggest since March, 2021’s 2.61 percent, and revisions were overall positive. May’s initially reported 0.96 percent monthly price-adjusted production gain was downgraded to 0.49 percent, but the April figure was revised up for a second time – to 0.71 percent – and March’s results were upgraded a third straight time, to 0.51 percent.

These industries are now 14.11 percent bigger in constant dollar terms than in February, 2020, versus the 11.41 percent gain calculable last month; and

>the electrical equipment, appliances, and components cluster, where price-adjusted production climbed 1.34 percent on a monthly basis in June, the strongest such showing since February’s 2.29 percent.. Revisions were positive on net, with May’s originally reported 1.83 percent monthly falloff downgraded to one of 2.35 percent, but April’s initially estimated -0.60 percent decrease upgraded a second time,to a 0.49 percent gain, and March’s three revisions resulting in an originally judged 1.03 percent increase now pegged at 1.23 percent. These results pushed these companies’ real production 5.59 percent higher than in immediately pre-pandemic-y February, 2020, not the 2.19 percent calculable last month;

The list of biggest manufacturing inflation-adjusted output losers for June was considerably longer, starting with

>printing and related support activities, where the monthly inflation-adjusted production loss of 2.16 percent was the worst such showing since February, 2021’s 2.26 percent. Revisions were actually net positive, with May’s initially reported dip of 0.35 percent upgraded to one of 0.15 percent; April’s results downgraded from a one percent advance to one of 0.33 percent after being revised up from an initially reported 0.49 percent; and March’s totals rising cumulatively from an initially reported 1.10 percent decrease to a decline of just 0.05 percent. All the same, the printing cluster is now judged to be 11.37 percent smaller in real terms than in February, 2020, not the 1.89 percent calculable last month;

>petroleum and coal products, whose June sequential production decrease of 1.92 percent was its biggest since January’s 2.96 percent. Revisions here were mixed, too, with May’s figure revised up from a 2.53 percent improvement to one of 2.61 percent; April’s totals downgraded a second time, from a 0.13 rise to one of 0.04 percent to a decrease of 1.91 percent; and March’s results increasing from an initial estimate of 0.72 percent to one of 1.03 percent. But whereas last month’s Fed release showed petroleum and coal products’ after-inflation output 1.21 percent above its last pre-pandemic level, this month’s reports that it’s 0.27 percent below.

>textiles and products, where price-adjusted output sank on month by 1.80 percent for its worst month since March’s 2.45 percent shrinkage. Revisions were negative, with May’s initially reported 0.02 percent real production decline downgraded to one of 0.35 percent, April’s upgraded 0.45 percent increase now pegged as a 0.05 percent decrease, and March’s initially reported 1.55 percent falloff now judged to be one of 2.45 percent. As a result, the sector is now 5.35 percent smaller in terms of constant dollar output, rather than down 3.80 percent as calculable last month; and

>primary metals, whose inflation-adjusted production sagged by 1.60 percent on month – its poorest performance since March’s 1.42 retreat. Revisions were overall positive here, with May’s initially reported 0.77 percent real output rise downgraded to one of 0.66 percent, April’s initially downgraded 1.22 percent increase revised up to 1.46 percent, and March’s initially reported 1.69 percent drop now judged to be that aforementioned 1.42 percent. Even so, primary metals price-adjusted production is now estimated as having inched up only 0.50 percent since the pandemic arrived, not the 4.45 percent increase calculable last month.

In addition, an unusually high three other major industry sectors suffered constant dollar output declines of more than one percent on month in June. On top of plastics and rubber products (1.25 percent), the were two that RealityChek has followed especially closely during the pandemic period – machinery and automotive.

As known by RealityChek regulars, the machinery industry is a bellwether for both the rest of manufacturing and the entire economy, since use of its products is so widespread. But in June, its real production was off by 1.14 percent on month, and May’s initially reported 2.14 percent decrease is now estimated at-3.14 percent – its worst figure since the 18.64 collapse recorded in pandemic-y April, 2020. And although this April’s numbers have been revised up twice, to have reached 2.20 percen, March’s initially reported 0.78 percent inflation-adjusted increase is now estimated to have been a 0.89 decrease. Consequently, in price-adjusted terms, the machinery sector is now estimated to be 4.70 percent larger than in February, 2020, not the 6.29 percent calculable last month.

As for motor vehicles and parts makers, dogged for months by that aforementioned semiconductor shortage, their real output was off by 1.49 percent on month in June, and May’s initially reported rise of 0.70 percent is now estimated as a1.86 percent decline. Following a slight downgrade, April’s output is now pegged as growing by 3.85 percent rather than 3.34 percent, and March’s initially reported 7.80 percent advance is now pegged at 9.08 percent – the best such total since last October’s 10.34 percent. Nonetheless, after-inflation automotive output is now reported to be 1.07 percent lower than just before the pandemic arrive in force, not the 1.17 percent higher calculable last month.

Notably, other industries that consistently have made headlines during the pandemic outperformed the rest of manufacturing in June.

Constant dollar output by aircraft- and aircraft parts-makers was up 0.26 percent month-to-month in June, but revisions were mixed. May’s initially reported 0.33 percent rise has now been downgraded to a 0.23 percent decline – snapping a four-month winning streak. April’s results were upgraded a second straight time – from a hugely upgraded 2.90 percent to an excellent 3.13 percent (the best such performance since January, 2021’s 8.60 percent burst). But the March figures have been substantially downgraded from an initially reported 2.31 percent to a gain of just 0.53 percent. After all this volatility, though, real aircaft and parts production is now 25.58 percent greater than in February, 2020, much better than the 19.08 percent calculable last month.

The big pharmaceuticals and medicines industry grew its real putput by another 0.39 percent in June, but revisions were generally negative. May’s initially reported 0.42 percent improvement, however, is now judged to be just an infinitesimal 0.01 percent. April’s upgraded 0.15 percent rise is now pegged as a 0.04 percent loss, and March’s results have been downgraded all the way from an initially reported 1.17 percent increase to one of just 0.49 percent. Price-adjusted output in these sectors, therefore, is now estimated at 12.98 percent higher than in February, 2020, versus the 14.64 percent calculable last month.

Medical equipment and supplies firms boosted their inflation-adjusted output for a sixth straight month in June, and by a stellar 3.12 percent – their best such performance since January’s 3.15 percent. May’s growth was downgraded from 1.44 percent to 1.01 percent, but April’s estimate rose again, from 0.51 percent to 1.01 percent, and March’s initially reported 1.81 percent improvement has been slightly downgraded to 1.67 percent. This progress pushed these companies’ real pandemic era output growth from the 11.51 percent calculable last month to 17.27 percent.

The news was significantly worse, though, in that shortage-plagued semiconductor industry. Real production rose by 0.18 percent sequentially in June, but May’s initially reported 0.52 percent advance is now judged to have been a 2.24 percent drop. Meanwhile, April’s already dreary initially reported 1.85 percent slump has now been downgraded again to one of 2.71 percent (the sector’s worst such performance since the 11.26 percent plunge in December, 2008 – in the middle of the Great Recession that followed the global financial crisis). Even March’s initially reported impressive 1.99 percent monthly price-adjusted production increase has been revised all the way down to 0.52 percent.

The bottom line: The pandemic-era semiconductor real production increase that was estimated at 23.82 percent last month is now judged to have been just 15.22 percent.

It’s not as if the recent official manufacturing data has been all disappointing. Employment, notably, rose respectably on month in June. And the pace of capital spending has actually sped up some (at least through May) – which, like employment is a sign of continued optimism among manufacturers about their future outlook.

But at this point, the headwinds look stronger – including continued credit tightening by the Federal Reserve (not to mention a drawdown in the massive bond purchases that also have significantly propped up the entire economy); the resulting downshifting in domestic economic growth at which the Fed is aiming in order to bring down raging inflation; an even worse slump in economies overseas, which have been important markets for U.S.-based industry; the strongest dollar in about two decades, which puts Made in America products at a price disadvantage the world over; and the ongoing supply chain snags resulting from the Ukraine-Russia War and China’s lockdowns-happy Zero Covid policy.

And don’t forget those stratospheric and still-rising manufacturing trade deficits, which could well mean that, once the unprecedented pandemic fiscal and monetary stimulus/virus relief that have helped create so much business for domestic industry starts fading significantly, U.S.-based manufacturers could might themselves further behind the eight-ball than ever.  

(What’s Left of) Our Economy: U.S.-Based Manufacturing Returns to Pre-Pandemic Job Levels

Tags

aerospace, aircraft, aircraft engines, aircraft parts, Bureau of Labor Statistics, CCP Virus, coronavirus, COVID 19, Employment, fabricated metal products, Federal Reserve, food products, inflation, Jobs, Labor Department, machinery, manufacturing, miscellaneous non-durable goods, monetary policy, non-farm jobs, non-farm payrolls, personal protective equipment, pharmaceuticals, PPE, printing, private sector, recession, semiconductors, supply chain, surgical equipment, textiles, transportation equipment, vaccines, {What's Left of) Our Economy

A power outage in my Maryland suburb of Washington, D.C. prevented me from filing my usual same-day post on the manufacturing highlights of the latest official U.S. jobs release, but the big news is still eminently worth reporting:

Specifically, “It’s back.” According to yesterday’s employment report from the Labor Department (for June), as was the case with the private sector overall, U.S.-based manufacturing last month finally regained all the jobs it lost – and then some – during the deep but short CCP Virus- and lockdowns-induced recession of spring, 2020.

The new figures show that by adding 29,000 workers on net sequentially during June, and having added slightly more to their headcounts in April than previously reported, domestic industry’s employment last month stood at 12.797 million. That’s 0.09 percent more than the 12.785 million on their payrolls in February, 2020, the last full data month before the pandemic’s arrival in force began decimating and distorting the economy.

As of June, American private sector workers now number 129.765 million – 0.11 percent above its immediate pre-pandemic level of 129.625 million.

Yet the entire non-farm economy (the employment universe of the Labor Department’s Bureau of Labor Statistics, which tracks employment trends for the federal government) still hasn’t recovered all the jobs it lost during March and April, 2020. Because public sector employment is still off some, June’s 151.980 million non-farm payroll count remains 2.38 percent below the February, 2020 total of 152.504 million.

The June jobs report left manufacturing employment at the same level of total non-farm employment (8.42 percent) as in May, and a slightly smaller (9.86 percent versus 9.87 percent) share of total pivate sector employment that month.

But since the CCP Virus’ large-scale arrival, domestic industry has boosted these percentages from 8.38 percent and 9.83 percent, respectively.

Another reason for optimism about the manufacturing results of the June jobs report: The 29,000 payrolls boost was a nice increase from May’s unrevised 18,000 increase – the worst monthly performance since April, 2021’s 28,000. And as noted above, this past April’s excellent results saw their second upward revision – from 58,000 to 61,000 (the highest month-to-month gain since last July’s 62,000).

May’s biggest manufacturing jobs winners among the broadest Individual industry categories monitored by the Labor Department were:

>transportation equipment, which has been on a genuine rollercoaster. June’s hiring increase of 7,200 followed a May loss revised down from 7,900 to 9,800 – the worst such monthly drop since February’s 19,900. Yet the April figure for the sector was upgraded from an unrevised 19,500 to 20,100 – and followed a March advance of 25,000. That was the best such performance since October’s 28,200.

Yet all this tumult – due largely to an ongoing semiconductor shortage still plaguing the automotive sector in particular – still left transportation equipment employment 2.23 percent lower than in immediately pre-pandemic-y February, 2020 – as opposed to the 2.57 percent figure calculable last month;

>miscellaneous non-durable goods, where headcounts improved by 5,400 – the biggest monthly increase since February, 2021’s 5,500. But volatility is evident here, too, as May’s previously reported 2,900 jobs decrease was revised downgraded 3,400 – the biggest decline since December, 2020’s -9,400. Yet payrolls in this catch-all sector are now 9.68 percent higher than in February, 2020 – up from the 8.12 percent calculable from last month’s figures;

>plastics and rubber products, whose 5,300 hiring advance was its best since April’s now twice upgraded 8,000 rise. Moreover, May’s initially reported jobs decrease of 400 is now judged to have been a gain of 2,600. These companies now employ 4.33 percent more workers than just before the pandemic’s large-scale arrival in February, 2020, versus the 2.88 percent calculable last month; and

>food manufacturing, which added 4,800 employees on month in June. In addition, May’s initially reported 6,100 increase was revised up to 7,600, more than offsetting a second downgrade of the April advance from 7,700 0 7,100. This huge industry’s workforce is now 2.87 percent greater than in February, 2020, as opposed to the 2.53 percent figure calculable last month.

The biggest jobs losers in June among the broadest manufacturing sectors were:

>printing and related support activities, where 900 jobs were cut in the biggest monthly decrease since January’s 1,800. Worse, May’s initially reported employment retreat of 400 is now estimated at 700, and April’s upgraded increase (of 3,100) was revised down to 3,900. Employment by these companies is now down by 10.63 percent since just before the CCP Virus’ arrival in force in February, 2020, versus the 10.23 percent calculable last month;

>textile product mills, whose sequential June jobs loss of 700 was its worst since last September’s 900. May’s initially reported 100 employment dip stayed unrevised, but April’s initially upgraded results (from a headcount loss of 400 to one of 300) is now judged to be a decline of 400 once again. Consequently, payrolls in this sector are now off by 5.32 percent since February, 2020, as opposed t the 4.60 percent calculable last month; and

>fabricated metal products, whose 600 job loss in June was its worst such retreat since April, 2021’s 1,600, and the first fall-off since then. Revisions were mixed, with May’s initially reported increase of 7,100 downgraded to 6,900 (still its best sequential performance since February’s 9,300 surge) but April’s losses were revised down again, from 1,600 to 1,400. Despite its recent hiring hot streak, however, payrolls in this large sector are still 2.31 percent below pre-pandemic-y February, 2020’s level, versus the 2.24 percent calculable last month.

As known by RealityChek regulars, the big machinery industry is a bellwether for all of domestic manufacturing and indeed the entire U.S. economy, since so many industries use its products. So it was definitely good news that employment in this sector rose on month in June by 1,000 after having dropped by a downwardly adjusted 3,200 in May. That’s the sector’s worst such performance since it shed 7,000 workers last November. (Note: Last month, I mistakenly reported the May, 2021 decrease at 7,900.)

Yet April’s hiring gains were revised down again – from 5,900 to 5,800 – and machinery employment is still off since just before the pandemic’s arrival by 2.05 percent, versus the 2.12 percent calculable last month.

As always, the most detailed employment data for pandemic-related industries are one month behind those in the broader categories, and interestingly, their May performance was generally better than that for domestic industry as a whole.

The semiconductor industry still struggling with the aforementioned shortages boosted employment on month in May by 800, and April’s initially reported 900 increase was revised up to 1,100 – the best since December’s 1,400. Even though March’s jobs improvement remained at a downgraded 400, payrolls in the sector moved up to 2.20 percent higher than just before the pandemic arrived in February, 2020 from the 1.66 percent calculable last month. And although progress seems modest, it must be remembered that even during the early spring, 2020 downturn, these companies added to their headcounts.

In surgical appliances and supplies (which includes all the personal protective equipment and other medical goods so widely used to fight the CCP Virus), employment in May climbed by 400 on month, April’s initially reported 200 loss is now estimated at just 100, and March’s unrevised 1,100 increase stayed unrevised. These results mean that these sectors have increased their workforces by 4.36 percent since February, 2020, versus the 3.88 percent calculable last month.

The large pharmaceuticals and medicines industry was a partial exception to this pattern, losing 100 jobs sequentially in May. But April’s initially reported 1,400 rise (the best monthly performance since last June’s 2,600) is now judged to have been 1,500. And March’s advance stayed at an upwardly revised 1,200. As a result, these industries now employ 10.10 percent more workers than in immediately pre-pandemic-y February, 2020, versus the 9.78 percent calculable last month.

The medicines subsector containing vaccines hired 600 net new employees on month in May, April’s 1,100 payrolls increase (the best such performance since December’s 2,000), stayed unrevised, as was March’s previously upgraded 600 increase. Consequently, these companies’ headcounts are now 25.08 percent above their February, 2020 levels, versus the 24.47 percent improvement calculable last month.

Good job creation also continued throughout an aerospace cluster hit especially hard by CCP Virus-related travel restrictions. Aircraft manufacturers added 1,300 workers in May, their most robust monthly hiring since last June’s 4,000 jump. April’s initially reported climb of 200 was upgraded to 500, and March’s results stayed at an upwardly revised 1,200. These companies’ workforces have now crept to within 10.30 percent of their pre-pandemic total, versus the 10.96 percent shortfall calculable last month.\

In aircraft engines and engine parts, jobs rose by 700 sequentially in May, and though April’s initially reported increase of 900 is now judged to be 800, it was still the best such performance since February’s increase of 900. March’s new hires stayed at an upwardly revised 600, leaving employment in this sector 10.91 percent below February, 2020 levels, versus the 11.56 percent calculable last month.\

Non-engine aircraft parts and equipment makers kept making steady employment progress as well. They added 300 workers on month in May, and their initially reported new April hiring of 300 is now estimated at 400. March’s employment increase stayed unrevised at 700, but this sector still employs 15.14 percent fewer workers than in February, 2020, versus the 15.48 percent calculable last month.

With the Federal Reserve still on record as seeing the need for slowing the economy’s growth (at best) in order to fight inflation, signs of recession multiplying (e.g., here), domestic industry’s major export markets looking increasingly weak as well, the Ukraine War dragging on, and supply chain problems ongoing (see, e.g., here and here) it’s difficult to expect U.S.-based manufacturers to escape these powerful downdrafts. But these companies have kept turning in remarkably strong results in production as well as hiring, so who’s to say they can’t keep bucking the odds?