(What’s Left of) Our Economy: Strong Crosswinds Roil the New U.S. Manufacturing Jobs Figures

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aerospace, air travel, automotive, CCP Virus, chemicals, coronavirus, COVID 19, Employment, fabricated metals products, infrastructure, Jobs, machinery, manufacturing, miscellaneous durable goods, miscellaneous non-durable goods, non-farm jobs, pharmaceuticals, PPE, private sector, regulation, semiconductor shortage, semiconductors, stimulus package, taxes, vaccines, wood products, Wuhan virus, {What's Left of) Our Economy

It’s tough to imagine a U.S. official monthly jobs report giving off so many conflicting signals about the health of domestic manufacturing and its outlook than the one that came out this morning (for April).

On the one hand, the sector’s 18,000 jobs loss was its worst monthly performance since the identical January setback. On the other hand, the problem was heavily concentrated in the automotive sector, which has been forced to cut back production due to the ongoing global semiconductor shortage. On the other, other hand (!), this shortage is unlikely to ease for many months. On still another hand, the revisions were strong. And some key manufacturing industries continued a recent pattern of solid results. At the same time, even removing the automotive results would still leave the rest of domestic manufacturing’s April employment performance decidedly weak.

I could go on in this vein – and will below.

The decisive automotive/semiconductor effect on the April manufacturing figures becomes clear enough upon realizing that this sector’s 27,000 sequential employment loss was considerably greater than manufacturing’s total on-month job decline. Nonetheless, even had automotive held its employment line, the consequent 9,000 manufacturing job increase would have been unimpressive at very best.

And yet there are those revisions. March’s initially reported 53,000 monthly manufacturing payroll increases – the best such figure since last September’s 55,000 – are now pegged at 54,000. Even better, February’s initially downgraded (from 21,000 to 18,000) monthly employment increase has now been revised all the way up to 35,000.

As a result, domestic industry has now regained 63.83 percent (or 870,000) of the 1.363 million jobs it shed during the height of the CCP Virus pandemic in spring, 2020. It’s still behind the private sector overall (which has recovered 66.88 percent of its pandemic peak employment loss), but still ahead of the overall economy’s (called the non-farm sector by the Labor Department, which issues the monthly jobs reports) 63.26 percent.

The only major April manufacturing jobs loser other than automotive was the small wood products sector (7,200). The big fabricated metals products industry saw employment fall by 2,900 on month in April, but the drop followed a large March gain that’s been downwardly revised but still stands at a strong 10,400.

The machinery numbers were downright encouraging, and that matters because as I keep reminding, this subsector’s products are used not only throughout the rest of domestic manufacturing, but in other important parts of the economy like construction and agriculture. Its April employment boost of 3,700 followed March job creation that was upgraded strongly to 5,400.

In the big miscellaneous durable goods sector, a catchall category that includes everything from surgical equipment and supplies (like personal healthcare protection equipment – PPE – more on which later) to jewelry to gaskets and fasteners to musical instruments, payrolls jumped by 12,600 – their best monthly performance since its 15,300 advance last July.

And two other significant manufacturing employers –miscellaneous non-durable goods and the big chemicals sectors (whose output is also used all over the economy) – each generated enjoyed healthy payrolls increases of 4,300 in April.

Even the industries closely related to the fight against the CCP Virus, whose employment performance since the pandemic’s arrival generally have disappointed, showed some signs of job-creation life in April.

The overall pharmaceutical industry added 1,500 jobs on month in March (the latest available figures) and Februay’s improvement remains a strong 1,700. Since the last pre-pandemic month (February, 2020), this sector’s payrolls have grown by 3.11 percent.

Hiring slowed in the pharmaceuticals subsector containing vaccines – from 1,300 sequentially in February (unchanged from the first estimate) to 500 in March (also the latest available figures). But these companies’ employment is still 6.77 percent higher than in that last pre-pandemic month of February, 2020.

The employment signals were mixed in the manufacturing category containing PPE goods like facemasks, gloves, and medical gowns. Monthly job creation in February was downgraded from zero to a loss of 100, but March’s results (also the most recent) came in at 900, and this sector now employs 8.75 percent more workers than in February, 2020.

In an aerospace industry troubled for years by Boeing’s safety woes, the recent jobs figures are literally all over the place. The latest (March) results show that payrolls for aircraft fell month-to-month in March by 1,800 – surely reflecting the continuing virus-generated slump in air travel. But February’s upward revisions were nothing less than stunning – skyrocketing from a jump of 1,000 to one of 11,700. Fluctuations – though more modest – were also evident in aircraft engines and parts, and non-engine aircraft parts.

Yet as confusing as the new manufacturing jobs figures have been, the future seems just as cloudy. Optimism remains justified by developments like the enormous amounts of stimulus still pouring into the U.S. economy, by the apparent certainty that a major injection of infratructure spending is (finally) on the way, and by the continuing reopening of the economy spurred by vaccinations and less consumer caution.

Even so, the semiconductor shortage is not only here to stay for some time, but has affected many other industries other than automotive. The rate of U.S. vaccinations is slowing and the virus – including the new variants – appears likely to stage something of a comeback when the weather cools again in the fall. Air travel may never recover to pre-virus levels, which will harm not only the aerospace industry per se, but its vast domestic supply chain. And higher taxes and many more regulations could well hit U.S.-based manufacturers – at least until the Congressional elections of 2022.

On balance, I’d still bet on a bright future for domestic industry – mainly because all the sentiment surveys show that manufacturers themselves are full of confidence, and because President Biden has kept in place all the Trump China and metals tariffs that have priced much foreign competition out of the U.S. market. But I’m far from willing to bet the ranch.

(What’s Left of) Our Economy: March U.S. Manufacturing Job Gains Lagged – For a Good Reason

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aerospace, aircraft, aircraft engines, aircraft parts, American Jobs Plan, automotive, Biden, Build Back Better, CCP Virus, coronavirus, COVID 19, Donald Trump, Employment, fabricated metal products, Jobs, Labor Department, lockdowns, machinery, manufacturing, non-farm jobs, pharmaceuticals, PPE, recession, recovery, regulation, semiconductor shortage, semiconductors, tariffs, taxes, Trade, travel services, vaccines, Wuhan virus, {What's Left of) Our Economy

This morning’s figures from the Labor Department show that U.S. domestic manufacturing was a bit of a jobs creation laggard in March – and that was good news. The reason? The employment gains for the rest of the economy were so enormous.

This latest monthly U.S. jobs report showed that non-farm payrolls (the definition of the U.S. jobs universe used by the Labor Department, which tracks these data), rose by 0.64 percent in March – to 144.210 million. Job-creation in the private sector advanced at a virtually identical rate.

Payrolls in manufacturing were up by a lower 0.43 percent – to 12.284 million. But they still increased by 53,000 – their best performance since September’s 55,000. It’s also possible that hiring in the automotive sector was held down by a global shortage of semiconductors – which has led to production cutbacks and even some layoffs.

The only disappointment in the new manufacturing jobs numbers concerned revisions – which were mostly negative. February’s initially reported 21,000 net employment gain is now estimated at 18,000. January’s 14,000 job loss (already downgraded from an initially judged 10,000) is now pegged at a still greater 18,000. But December’s improvement was upwardly revised again – from 34,000 to 35,000.

As a result, manufacturing has now regained 63.83 percent (870,000) of the 1.363 million jobs the sector shed during the peak CCP Virus lockdowns period of last March and April. That’s fewer relatively speaking than the recovery in private sector employment – 66.88 percent (14.172 million) of the 21.191 million jobs it lost during that period.

But because of continuing weakness in the public sector – which has recovered just 66.42 percent of its 22.362 million job loss last spring – manufacturing’s payrolls’ rebound is still ahead of the entire economy’s. In fact, manufacturing jobs now account for a higher (8.52 percent) of total non-farm employment than during the last full pre-pandemic data month (8.39 percent in February, 2020).

The biggest manufacturing jobs winners in March? Far and away the champ was the big fabricated metals products industry, which expanded employment by 13,700 – more than a quarter of the manufacturing total. Next came two smallish sectors – miscellaneous non-durable goods and printing and related support activities (up 7,400 and 5,900, respectively). Encouragingly, jobs increased by 3,500 in the big machinery sector – whose products are used throughout not only the rest of manufacturing but the entire economy.

The worst performers were transportation equipment – whose 3,000 lost March jobs included 1,000 in the automotive sector, which has been forced into production cutbacks and some layoffs due to the global semiconductor shortage – and furniture (down 1,300).

Unfortunately, these latest figures indicate that employment in many CCP Virus-fighting goods continues to lag. To be sure, their payrolls seem to be up from the last pre-pandemic levels whereas overall manufacturing jobs are down (by 4.02 percent). But given the nature of the emergency, and the shortages it revealed, it’s surprising they’re not higher still.

The relevant numbers only go through February, and in the broad pharmaceuticals sector, employment rose by 1,600 sequentially. And January’s initially reported 700 job loss has been upgraded to a decrease of only 100. But the sector’s payrolls have grown by a mere 2.60 percent since that last pre-pandemic month of February, 2020.

The performance of the pharmaceuticals subsector containing vaccines was considerably better. February payrolls expanded by 1,300 sequentially, and January’s gains are now estimated at 500, not 100. As a result, this vaccine-related sector’s employment levels are now 6.23 percent higher than in February, 2020.

The story, however, has been more discouraging lately in the manufacturing category containing personal healthcare-related protection devices (PPE) like facemasks, gloves, and medical gowns. Payrolls were flat on month in February, and the initially reported January job loss of 800 was only upgraded to a decline of 700. Still, payrolls in this sector have climbed by 7.98 percent since February, 2020.

Interestingly, despite the rebounding orders for Boeing’s popular but previously grounded 737 Max jetliner, the recovery of national and global travel, and the resumption of deliveries of its also-troubled 787 Dreamliner, none of these positive developments has shown up in the aerospace jobs numbers.

For example, aircraft employment in February (also the latest available figures) grew by only 1,000 on month and not only remains down 10.66 percent on year, but substantially lower than all of last year’s safety crisis- and the worst of the CCP Virus-plagued months. Similar trends hold for aircraft engines and engine parts, and non-engine aircraft parts.

The outlook for domestic manufacturing job creation still seem bright, as vaccinations are being administered rapidly, reopenings are spreading, igniting renewed overall economic activity, Boeing does seem to be emerging from its safety and manufacturing-related troubles, and the high, sweeping Trump tariffs keep pricing many Chinese goods out of the U.S. market, thereby creating new opportunities for American producers.

But that global semiconductor shortage, which will eventually affect much more than automotive output, may not end until late next year. It’s tough to know the overall impact of the Biden administration’s American Jobs Plan and other Build Back Better virus recovery proposals on the one hand, and the tax increases proposed to pay for them on the other, as well as the new regulations that will be involved – assuming even that they pass Congress reasonably intact. And vaccines production won’t be booming forever.

So no one concerned about domestic manufacturing’s health and prospects has any excuse not to peruse carefully all the industry-related data and news that are in store in the weeks and months ahead.

(What’s Left of) Our Economy: More Reopening, Not Endless Money, is Now the Best Jobs Strategy

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African Americans, American Rescue Plan, Biden, CCP Virus, coronavirus, COVID 19, Covid relief, education, Employment, Federal Reserve, Hispanics, hotels, Jerome Powell, Jobs, Latinos, leisure and hospitality, lockdowns, recovery, restaurants, shutdown, stay-at-home, stimulus package, unemployment, wages, Wuhan virus, {What's Left of) Our Economy

There’s no doubt that the American jobs market has suffered an out-and-out disaster since it got hit by the CCP Virus and the follow-on lockdowns and other restrictions. There’s also no doubt that many workers and their families are still suffering greatly, and will need government aid to make it to the Other Side, and the Biden administration’s American Rescue Plan legislation that the President will likely sign into law soon will help fill this gap.

Plenty of doubt remains, however, about whether all, or close to all, of the massive funds approved in this measure are actually needed to cure the economy’s remaining employment woes, and one of the main reasons is the nature of the jobs blow that’s been delivered. Because it’s been so heavily concentrated in the country’s leisure and hospitality industries (encompassing eateries and drinking places of all kinds, plus hotels and motels, and entertainment and cultural venues), it’s entirely possible that nowadays, the most effective way to fix the jobs market fastest would be to lift the lockdowns and other mandated curbs that have fallen so hard on sectors that depend on serving in-person customers.

The case for relying on a virus-relief/stimulus package this big, at this stage of the economy’s recovery from its pandemic-induced recession, has been eloquently stated by President Biden and by Federal Reserve Chair Jerome Powell. The former warned just before the legislation passed that the U.S. economy “still has 9.5 million fewer jobs than it had this time last year. And at that rate, it would take two years to get us back on track.”

The latter has stated that he won’t be satisfied that full employment has returned until he sees what one reporter has called “broad-based gains in employment, and not just in the aggregate or at the median.” As a result, the Fed Chair is paying particular attention to (the reporter’s words again) “Black unemployment, wage growth for low-wage workers and labor force participation for those without college degrees, categories that historically have taken longer to recover from downturns than broader metrics.”

But it’s precisely these less fortunate portions of the workforce that would be helped disproportionately – and then some – by focusing on reopening steps that would surely affect the leisure and hospitality industries just as disproportionately.

If you doubt the importance of leisure and hospitality job loss over the last year in terms of overall U.S. jobs loss, here’s what you need to know. Of the 8.068 million positions shed by the country’s private sector between last Februrary (the final month of pre-CCP Virus normality for the American economy), fully 3.451 million have come in the leisure and hospitality industries. That’s nearly 43 percent.

Put differently, during that final normal economic month, leisure and hospitality workers represented just 13.04 percent of all private sector workers. Yet their employment plunge was more than three times as great relatively speaking.

Moreover, leisure and hospitality’s progress in getting back to pre-pandemic square one has been slower than that of the private sector overall. Since the April employment trough, leisure and hospitality has regained 4.955 million of the 8.224 million jobs lost during the worst of the pandemic, or 60.25 percent. For the private sector in toto, 13.267 million of the 21.353 million jobs lost in March and April have come back since – 62.13 percent.

It’s also clear that many of the kinds of workers about which Fed Chair Powell has been most concerned are concentrated in leisure and hospitality. For example, in 2019, (America’s last pre-CCP Virus full year), 13.1 percent of these sectors’ workers were African American versus 12.3 percent for the entire U.S. economy (including government workers at all levels), and 24 percent were Hispanic or Latino versus 17.6 percent for the entire economy.

Leisure and hospitality companies tend to employ Americans with low levels of formal education, too. According to the Labor Department, in 2019, 79.9 percent of the nation’s “first-line supervisors of house-keeping and janitorial workers” 25 years and older lack even an associate’s degree, and 76 percent of their food preparation and service counterparts fall into this category. The shares are even higher for the workers they supervise. Meanwhile, only 51.5 percent of all U.S. workers haven’t taken their education beyond high school.

Not surprisingly, therefore, leisure and hositality jobs pay poorly. In February, 2020, just before the arrivals of the pandemic and the lockdowns, their average hourly wages were only 59.28 percent those of all private sector workers. Last month, this figure had fallen to 57.58 percent. (See Table B-3 here.) 

For most of the pandemic period, the U.S. government at all levels pursued a mitigation strategy that aimed mainly at curbing economic and other forms of human activity across-the-board. Now, even with vaccinations and growing population-wide immunity showing strong signs of bringing the pandemic under control, the Biden administration and the Democratic Congress are just as determined to stimulate the economy that’s still significantly shut down by with an American Rescue Plan that seems just as indiscriminate.

As I’ve been writing (see, e.g., here), it should have been clear since late last spring that the anti-virus fight would have much more effective (and less harmful to the economy and other dimensions of public health) had it targeted protecting especially vulnerable populations. I strongly suspect that, with the fullness of time, it will become just as clear that a stimulus and jobs strategy emphasizing accelerating reopening, and thus aiding sectors and workers hardest hit by the remaining shutdowns, will prove a much more effective employment cure than the indiscriminate spending approach on which Washington has just doubled down.

(What’s Left of) Our Economy: A Winning Streak Broken But a Still Encouraging Outlook for Manufacturing Jobs

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aerospace, Biden, CCP Virus, China, coronavirus, COVID 19, Donald Trump, Employment, healthcare goods, Jobs, Labor Department, machinery, manufacturing, NFP, non-farm payrolls, pharmaceuticals, PPE, tariffs, vaccines, Wuhan virus, {What's Left of) Our Economy

U.S. manufacturing’s eight-month streak of hiring gains ended in January, with industry shedding 10,000 jobs from December’s levels. Also dimming the results reported for the sector in this morning’s offiical employment figures were moderately negative revisions. Moreover, despite the CCP Virus emergency, and the vaccine production ramp up, job creation in health care-related manufacturing (where the most detailed figures only go up to December) remained disappointing.

Although the manufacturing jobs revisions for November and December weren’t nearly as great as the unusually large changes for the Labor Department’s overall U.S. jobs universe (called “non-farm payrolls”), they still weakened the employment outperformance recorded by the sector since job levels bottomed out in April.

December’s originally reported on-month manufacturing jobs increase was downgraded from 38,000 to 31,000. And although the November data saw their second upward revision (from 27,000 to 35,000 and now to 41,000), the findings for October fell all the way from 43,000 to 32,000. (They were originally reported as 33,000.)

The January numbers mean that manufacturing has regained 58.91 percent (803,000) of the 1.363 million jobs it lost during the pandemic’s first wave and resulting sweeping lockdowns in March and April.

That pace is now slightly behind that of the total private sector, which since April has recovered 60.34 percent (12.788 million) of the 21.191 million jobs lost last spring.

But manufacturing’s employment is still faring better than the total non-farm sector (which includes hard hit state and local governments). Overall, as of January, the economy has regained just 56.27 percent (12.47 million) of the 12.321 million jobs lost in March and April.

Despite decreasing in toto in January, employment in some manufacturing sectors nonetheless improved. These winners were led by the big chemicals industry (up 10,500), food products (2,200), and miscellaneous durable goods, computer and electronics products, and wood products (up 1,300 each). Within the computer sector, payrolls in semiconductors and related devices rose by 1,800.

January’s biggest losers were non-metallic mineral products (down 6,400), automotive (off by 5,300), fabricated metals products (a 4,100 loss), and electrical equipment and appliances (down 3,200).

Unfortunately, given its importance as an equipment supplier to the manufacturing sector and other important U.S. industries, employment in machinery declined by 700 on month in January, and revisions were deeply negative.

Also discouraging were the most recent jobs figures for healthcare-related manufacturing, especially given the vaccine progress and months of national alarm about dangerously inadequate domestic production of these critical goods.

Generally, employment increases continued, but the pace remains sluggish. For example, the broad pharmaceuticals and medicines sector added 2,200 jobs in December, and revisions were slightly positive. But payrolls here have grown by a mere 2.09 percent since February – the last month before the virus’ health and economic impact began to be fully felt.

Employment advanced again in December in the sub-sector containing vaccines. But about half of the sequential increase of 1,100 was offset by downward revisions for October and November. And this sub-sector’s total headcount is up just 4.35 percent since February.

The opposite pattern was seen in the manufacturing category containing personal healthcare-related protection devices (PPE) like facemasks, gloves, and medical gowns. Its payrolls rose fell by 400 sequentially from November to December, but revisions for the previous two months rose by the same miniscule total. Still, this industry’s 8.08 percent job growth since February led healthcare manufacturing by a wide margin.

Despite January’s setback, a reasonable case can be made that manufacturing’s employment prospects still look bright for several reasons. Progress will surely keep being made on the PPE front. Vaccine production is set to surge. A large aerospace sector long hobbled by Boeing’s safety woes is seeing the company’s troubled 737 Max model being recertified for flight by more and more countries. Any national and global recovery will see demand for air travel revive.  And because President Biden has decided to keep Donald Trump’s steep, sweeping tariffs on imports from China in place for the time being. Consequently, industry can be expected to supply more U.S. demand than usual as the economy returns to normal however quickly or slowly.

(What’s Left of) Our Economy: More Manufacturing Jobs Strength – & Vindication of Trump Tariffs

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737 Max, aerospace, automotive, Boeing, CCP Virus, China, coronavirus, COVID 19, Employment, Jobs, machinery, manufacturing, manufacturing jobs, non-farm payrolls, pharmaceuticals, PPE, private sector, tariffs, Trade, trade war, Trump, vaccines, Wuhan virus, {What's Left of) Our Economy

This morning’s official U.S. jobs report, for December, shows that, to paraphrase that unforgettable battery ad slogan, domestic manufacturing just keeps hiring and hiring and….

As a result, the December data also add to the already compelling case that domestic industry’s continued resilience – including an ongoing hiring out-performance – owes significantly to the Trump tariffs that have prevented imports from China from flooding U.S. markets and massively depriving Made in America products of customers as they had before his presidency.

The nation’s manufacturers boosted their payrolls by 38,000 on month in December, even as the private sector shed 95,000 jobs and government at all levels lost 45,000.

Moreover, in line with the strong overall employment revisions for October and November, industry’s previously reported 33,000 hiring improvement for the former (which had already been downgraded from 38,000) is now judged to be 43,000. And November’s figure has been upgraded from 27,000 to 35,000.

Although this performance pales compared with the 333,000 jobs added in manufacturing in June, the sector continues to punch above its employment weight, and in fact has now won back a status it apparently had lost in the fall.

As of December, U.S.-based industry had regained 60.16 percent (820,000) of the 1.363 million jobs it had lost during the worst (so far) of the pandemic-induced downturn in March and April.

That’s slightly ahead of the total private sector, which has recovered 59.91 percent (12.696 million) of its 21.191 million drop last spring.

And its considerably ahead of the overall economy’s record. Non-farm payrolls (the definition of the American employment universe used by the Labor Department, which issues these jobs reports) have risen by 12.321 million since April, a bounceback reprsenting only 55.60 percent of their 22.160 million plunge that month and in March.

The big reason is the slump in government jobs at all levels, and especially in states and localities. Public sector employment sank by 45,000 sequentially in December and by 81,000 the month before. And the outlook for public sector employment remains clouded by the brightening (due to the nearly final 2020 election results) but still uncertain prospects for a federal bailout of state and local governments, whose December monthly job losses totaled 49,000. (The federal government actually added positions.)

Manufacturing’s biggest monthly employment winners in December were plastics and rubber products (up 6,900), the automotive sector (6,700), non-metallic mineral products (6,100), food manufacturing (5,500), and apparel (4,000).

Especially encouraging were the 2,800 jobs created by domestic machinery makers, since the equipment they make is so widely used throughout the rest of manufacturing and elsewhere in the economy. November’s on-month machinery jobs gains were revised up from 1,900 to 2,500, but October’s totals were revised down for a second time, from 3,000 to 2,700.

December’s biggest manufacturing job losers were miscellaneous non-durable goods (down 11,200 sequentially) and primary metals (down 2,100).

Also on the encouraging side: Better progress has been made in job-creation for the CCP Virus-related medical manufacturing categories. These only go through November, but they show that the the broad pharmaceuticals and medicines sector added 1,000 new jobs that month, and its October figure was upgraded all the way from 100 to 1,100.

In addition, the sub-sector containing vaccines increased payrolls in December by 1,100, and its October performance was revised up from 600 to 1,100.

But in the manufacturing category containing PPE goods like face masks, gloves, and medical gowns, along with cotton swabs, the previously reported October employment increase stayed unreivsed at 400, and the November growth was only 500.

These results, however, still mean that the PPE category’s job gains since February have been much stronger (7.85 percent) than those of the vaccines category (a disappointing 2.82 percent) and of the broader pharmaceuticals industry (an even weaker 1.40 percent).

Finally, other than the prospect of a vaccine-related return to normal in the U.S. and global economies (for domestic manufacturing is a big exporters), the biggest reason for further manufacturing employment optimism concerns the aerospace sector. It’s been pummeled by both the pandemic-induced nosedive in air travel around the world, and by Boeing’s safety woes.

The U.S. aerospace giant isn’t out of the woods yet. Its troubled 737 Max model has now been recertified by the federal government as safe to return to flight, but new production-related problems have cropped up, too. Moreover, who can say with any confidence when “normal,” or enough of it to help, Boeing, returns?

Yet assuming some substantial Boeing recovery in the foreseeable future, a major restart of its own manufacturing could give a big boost to domestic industry as a whole, given its many and long domestic supply chains.

(What’s Left of) Our Economy: October Costs Manufacturing Some Jobs Momentum

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(What's Left of) Our Economy, automotive, CCP Virus, coronavirus, COVID 19, election 2020, Employment, fabricated metal products, food products, Jobs, Joe Biden, machinery, manufacturing, metals, motor vehicle parts, NFP, non-farm jobs, non-farm payrolls, private sector jobs, recession, regulation, tariffs, taxes, Trade, transportation equipment, Trump, Wuhan virus

The manufacturing jobs picture revealed in this morning’s October official U.S. jobs report was a classic glass-half-empty/half-full story. But for the first time since the employment rebound from its CCP Virus-induced lows, the gloomier view seems to have the edge – though a modest one. The main reason: In October, the rate of cumulative manufacturing job creation fell slightly behind that of the U.S. government’s entire employment universe (so-called non-farm payrolls, or NFP), and of the private sector.

Domestic industry increased its employment level on net by 38,000 in October on a sequential basis. That figure represented a decrease from the September total – which has been revised down from 66,000 to 60,000. But it’s an improvement over August’s also downwardly revised 30,000 total.

In addition, as opposed to dominating the manufacturing jobs picture for good and ill, as it has during the pandemic recovery period, automotive jobs, rose by a mere 1,400. The downward revision in combined vehicle and parts payrolls in September, however (from 14,300 to 7,700) did account for more than all of the total downward manufacturing revision for the month.

October’s manufacturing net jobs-creation leaders were fabricated metals products (7,200), food manufacturing (6,200), primary metals (6,000), and machinery (3,900). The first two categories enjoyed their second straight month of relatively strong job improvement, while the primary metals gain amounted to an important turnaround from September’s 3,400 net employment loss.

At the same time the October machinery results – important because that sector influences so much manufacturing activity overall, and because of its close connections to non-manufacturing industries like agriculture and construction) – were much less impressive than the 12,600 employment rise of September. Worse, this figure itself was downgraded from the initially reported 13,800.

The only significant October jobs loser in manufacturing was transportation equipment. This large category – which includes automotive – shed 2,400 jobs on net. The big problem here was motor vehicle parts, where employment fell by 2,800.

October’s employment progress means that manufacturing overall has regained 742,000 (54.44 percent) of the 1.363 million jobs it lost during the worst of the CCP Virus economic slump of March and April. (Those earlier job losses represented 10.61 percent of the last pre-virus – February – manufacturing employment level.)

As of October, non-farm payrolls total had regained 12.070 million (54.47 percent) of the 22.160 million total decrease they suffered in March and April. So although by this definition, overall U.S. employment plunged by 14.53 percent during the virus low point – more proportionately than manufacturing) — the rate of its jobs rebound is now slightly faster.

Faster still has been the bounceback in private sector jobs. Non-government employment (whose status is much more revealing of the economy’s fundamentals than government employment) fell by 21.191 million in March and April combined – greater relative losses (16.34 percent) than experienced either by manufacturing or the non-farm sector. But its strong October performance mean that it’s regained 12.317 million of these position on net – an increase of 58.12 percent.

But as if the CCP Virus and its decimation of the economy haven’t created enough uncertainties for manufacturing employment (and for the economy as a whole), this week’s Election 2020 results could further muddy the waters – especially if the White House changes hands. Despite October’s jobs slowdown, industry’s employment and output have held up well, due no doubt significantly to President Trump’s tariff-centric trade policies and domestic overhauls in taxes and regulations. The Trump manufacturing record pre-virus has also been strong. Would a Biden administration reversal of these moves put U.S. manufacturing back behind the eight-ball? Or would it find new alternative growth fuels for industry?

(What’s Left of) Our Economy: For Now, the U.S. Manufacturing Jobs Picture is Normalizing

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automotive, Employment, government workers, Jobs, manufacturing, non-farm employment, non-farm jobs, non-farm payrolls, private sector, public sector, stimulus package, {What's Left of) Our Economy

The total U.S. economy and employment pictures sure aren’t anywhere close to normal, but this morning’s official jobs report (for August) looked awfully familiar to anyone who’d been following payrolls in manufacturing before the CCP Virus struck. And the noteworthy result:  Industry continues to be a jobs outperformer during this pandemic period.     

In contrast to the enormous, and largely automotive-driven swings of previous months, U.S.-based manufacturers added 29,000 net new jobs last month compared with July’s levels. Automotive payrolls shrank by only 5,300.

Moreover, as with the overall non-farm economy (the U.S. government’s definition of the American employment universe), revisions to recent manufacturing results were slightly negative. July’s initially reported 26,000 manufacturing employment increase was revised up to 41,000, but June’s previous estimate of 357,000 (itself revised up) is now judged to have been just 333,000.

This time around, domestic industry’s biggest sequential employment winners in absolute terms were food products (up 12,100), plastics and rubber products (up 6,500), and fabricated metal products (up 5,900). The biggest losers were transportation equipment (whose 8,400 loss includes the 5,300 combined figures for vehicles and parts), non-metallic mineral products (down 4,400), and printing (down 4,100).

In all, from February (the last full month before virus-related shutdowns began dramatically depressing national economic activity) through its April bottom, manufacturing payrolls fell by 1.363 million, or 10.61 percent). Since then, industry has regained 643,000 (or 47.18 percent) of those positions. As a result, manufacturing employment is now 5.60 percent lower than in February, before the virus arrived.

Underscoring manufacturing’s relative resilience during the pandemic-induced recession, between February and April, the American private sector shed 21.191 million workers – a drop of 16.34 percent. Since then, 10.473 million net jobs have been restored (nearly half – 49.42 percent– of the total lost). As a result, private sector employment is now 8.26 percent below those pre-CCP Virus February levels.

In addition, from February through April, total non-farm employment sank by 22.34 million, or 14.64 percent. Since then, a net of 10.611 million (or 47.50 percent) of these jobs have come back, leaing non-farm payrolls 7.57 percent short of their pre-pandemic totals.

But since non-farm payrolls include public sector jobs, this performance will surely weaken if the Democratic-Republican standoff in Washington over economic stimulus stays unresolved for much longer, since one of the main bones of contention is federal aid for state and local governments whose tax revenues have been decimated by the virus and lockdowns.

Further, public sector jobs losses (and the service cuts sure to accompany them) inevitably will bleed into the private sector, as government is an important customer of what the private goods and service companies provide – both in terms of procurement, and in terms of how much government workers and their households consume.

Consequently, without a stimulus agreement, as unsatisfactory as this latest U.S. jobs report was, it might wind up being fondly remembered – including by manufacturers.

(What’s Left of) Our Economy: Picking Through the April Jobs Wreckage Details

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Employment, Great Depression, Great Recession, Jobs, Labor Department, manufacturing, NFP, non-farm jobs, non-farm payrolls, private sector, unemployment, {What's Left of) Our Economy

Today’s U.S. jobs report from the Labor Department (for April) is the first that makes fully (so far) clear the historic American employment disaster created by a combination of the CCP Virus and widespread economic shutdown and lockdown orders.

As widely observed already, the 14.9 percent national unemployment rate for the month is the highest suffered since the Great Depression of the 1930s. During this slump, (which, it can never be forgotten, helped pave the way for World War II), the annual jobless rate peaked in 1933 at 24.9 percent. Moreover, as always with these monthly jobs releases, the data only cover mid-month. So the May report will almost surely bring considerably worse new April revisions, just as the April report showed sharp downward revisions for March and even February.

Worse, as the Labor Department employment trackers observed, in April they were able to reach only about 70 percent of the number of households they tried contacting in their standard efforts to calculate that unemployment rate. They pre-virus response rate was 83 percent. And although it’s entirely possible that this weak response rate has overestimated unemployment, it could be producing an underestimate, too.

That big uncertainty aside, the revisions are a good place to start highlighting how the details of today’s numbers underscore what an unprecedented shock the economy is absorbing.

Principally, that March total plunge in non-farm payrolls (NFP, the Labor Department’s U.S. jobs universe) was first reported at 701,000 – a figure that was (sadly) exceeded four times during the Great Recession that followed the 2008-09 financial crisis. Now these March losses are pegged at 870,000 – much higher than the Great Recession peak of 784,000 in January, 2009. April, of course, has blown away such comparisons, as NFP plummeted by 20.50 million. Indeed, that’s the largest monthly decrease in absolute terms in the history of these Labor Department data, which go back to 1939.

As a result, U.S. employment levels are back to where they were in February, 2011 – meaning that more than nine years of jobs gains have just gone up in smoke.

In fact, those 20.500 million net jobs destroyed in April alone (again, this is a preliminary number, which will be re-estimated twice more in the next two months, and then again when Labor issues the next of its standard multi-year revisions) represent more than twice as much employment loss as that experienced during the entire Great Recession (whose jobs dimension lasted from December, 2007 until March, 2010) – 8.698 million.

As for the private sector, the initially reported March jobs collapse of 713,000 was topped five times during the Great Recession. But this morning’s new March jobs wipeout figure of 812,000 now matches that recession’s worst (hit in April, 2009). Tragically, the new April private sector job loss figure of 19.520 million makes even those dreadful numbers look positively quaint.

Oddly, even though its April monthly job loss was 1.33 million, manufacturing has continued to hold up relatively well so far during the CCP Virus crisis. Industry’s March payroll decline was revised down from 18,000 to 34,000. And the April figure was much worse than manufacturing’s worst month during the Great Recession (289,000, recorded for January, 2009). Moreover, the 1.330 million April manufacturing employment nosedive was more than half of the total manufacturing job decrease during the entire Great Recession (2.293 million).

All the same, since February, whereas total U.S. job totals are off by 14.02 percent since February, and private sector employment has fallen by 15.70 percent, manufacturing’s drop has been 11.87 percent.

Once more, this relatively bright picture could change either with next month’s NFP report, or relatively quickly thereafter, as the economy reopens. But it’s also important to keep in mind that the pre-Great Recession total U.S. employment peak of 138.392 million in December, 2007 wasn’t matched again until May, 2014. It took until March, 2014 for the private sector to regain its pre-recession employment peak of 116.060 million. And manufacturing has never regained its pre-recession level of 13.746 million – which itself was far from a peak, because its payrolls had been decreasing for decades. The best it did was to regain 1.413 million (61.62 percent) of the 2.293 million jobs lost during the Great Recession. This level was hit just last December.

And all these recoveries were reasonably “V-shaped” (that is rapid), by historical standards. Unfortunately, “V” seems to be a letter going out of style as economists struggle to figure out what the post-CCP Virus recovery will look like.

(What’s Left of) Our Economy: A Great Recession-Like Jobs Report

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BLS, Bureau of Labor Statistics, CCP Virus, Employment, Great Recession, Jobs, manufacturing, nonfarm jobs, private sector, {What's Left of) Our Economy

Since this U.S. economic nosedive is, as the Monty Python crew liked to say, “completely different,” this post will depart from its usual format, too – by trying to provide some perspective on today’s horrendous (March) employment report from the Bureau of Labor Statistics (BLS). Unfortunately, this perspective isn’t terribly comforting. 

First, three reminders:

>The insanely astronomical number of jobless claims applications filed in the last two weeks make clear that at least in the near future, the employment situation will become much worse. Specifically, these claims numbers have totaled some 10 million in the last two weeks alone. That’s 7.75 percent of the entire private sector workforce as of the March figures.

>Similarly, as with all the monthly U.S. jobs reports, the March number described the situation only as of mid-month. Most of the economy and broader American CCP Virus-related shutdown measures were mandated or suggested afterwards.

>And in this vein, this morning’s March data were only preliminary. They’ll be revised twice more in the next two months, and then the full-year 2020 results will be revised. Indeed, the job creation figures for January and February (which were still decidedly strong) were downgraded by 57,000 in all.

Having cleared away that brush, it’s still interesting to note that, however terrible the new numbers are – and however terrible-er they’re bound to get – so far the March jobs meltdown hasn’t been as bad as the monthly nosedives suffered during the Great Recession. But it’s already way too close for comfort.

Whereas total nonfarm jobs (the BLS’ U.S. jobs universe) fell on month in March by 701,000, during the previous decade’s punishing downturn, that figure was topped no less than four times, and peaked at 784,000 in January, 2009.

Moreover, no sequential employment growth returned till that November, and it hit just 12,000. Worse, the very next month, payrolls sank by 269,000. The bottom was finally hit in February, and jobs growth recovered slowly afterwards, in fits and starts. Year-on-year employment gains didn’t reemerge until September.

As for private sector jobs, last month’s 713,000 collapse was exceeded during the Great Recession five times, with the worst results coming in April, 2009 (when 812,000 jobs were wiped out).

Private sector employment bottomed in February, 2010, too, and also rebounded sluggishly unevenly, with year-on-year gains coming only in August.

All told, 8.698 million jobs were lost from the onset of the Great Recession (December, 2007) to that February, 2010 trough. For the private sector, the losses totaled 8.794 million. Both figures are alarmingly close to the sum of the last two weeks’ jobless claims.

Interestingly, manufacturing jobs fell by only 18,000 sequentially in March. And on a yearly basis, they’re actually up by 12,000.

But since so many customers for American manufacturers are the workers who are being sidelined, and their former employers who are closing their doors or scaling their operations way back, these numbers, too, are bound to skyrocket.

Will a recovery in manufacturing and overall employment come even as quickly as after the Great Recession (which, again, wasn’t so quick)? Because this slump really is so “completely different” due to its biological origins, that’s the $64,000 Question. Given that a virus second wave is distinctly possible before vaccines or cures are ready, and given that normality as a result is only likely to return slowly to any business or consumer activity that requires close person-to-person proximity, there’s room for plenty of doubt.

 

(What’s Left of) Our Economy: How Big a China Virus Hit?

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China virus, coronavirus, COVID 19, Economic Policy Institute, Employment, employment multiplier, Jobs, output, output multiplier, production, {What's Left of) Our Economy

The short answer to the headline’s question? “Really big.” Which is kind of obvious. So today I thought I’d present some information on techniques economists use to come up with a somewhat more specific idea.

First let’s look at jobs – because jobs obviously affect people and their ability to provide for themselves. Economists taking a “put people first” approach would start by looking at the official federal government data on how many Americans are employed by those parts of the economy that clearly will be most seriously affected. Those numbers look like this as of last month’s preliminary figures, in millions of employees:

retail trade:                                                            15.659           1.22

educational services:                                               3.838           1.94

  (includes public & private institutions)

leisure & hospitality:                                            16.873

arts, entertainment, & recreation:                           2.494          3.79

  performing arts & spectator sports:                     0.516

  spectator sports*:                                                 0.146

accommodation & food services:                        14.379          1.61

  accommodation:                                                  2.092

  restaurants & other eating places:                     11.103

*January figure

The indented categories are industries of special interest that are sub-sectors of the larger categories below which they appear. And if you add up the major categories, you come up with 54.193 million workers – nearly 42 percent of the total U.S. private sector workforce.

Sharp-eyed readers will notice a number to the right of the worker figures – that number shows what’s called the employment multiplier for the sector in question. Simply put, it means how many jobs in other parts of the economy the maintenance, creation, or loss of a single job in the first sector affects. In other words, every job in American retail companies and stores affects 1.22 jobs elsewhere (e.g., from suppliers that furnish that industry with the inputs it needs to function, and from the purchases its own workers make from other industries).

Employment multipliers aren’t easy to find – these come from a Washington, D.C. think tank called the Economic Policy Institute, and don’t cover all the initially affected sectors. But from these data alone, it’s obvious that the total number of U.S. jobs that could be lost, or see a cutback in hours, is much greater than the employment damage done, for example, by the simple closing of a single restaurant or sports stadium.

Most economists would also look at how much output the most seriously affected industries contribute to the gross domestic product (GDP – the total sum of all the goods and services Americans turn out during a given time period). GDP and output matter, of course, because if businesses aren’t producing goods and services, they won’t need employees. Here how they look, according to a measure called “value-added” – which seeks to eliminate various forms of double-counting that result when trying to gauge production in sectors that make final products, and sectors that make their parts, components, materials, ingredients, and other inputs. Also important – these figures are not adjusted for inflation.

Percent of total U.S. value-added

retail trade:                                                            5.50           0.66

healthcare services & social assistance:               7.60

educational services:                                            1.20           0.72

performance arts, spectator sports, museums &

  related activities:                                               0.70            0.81

accommodation & food services:                       3.10

  accommodation:                                               0.80

  food services:                                                   2.30

Again, the sub-categories are indented. Here the total percent figure is much smaller than the employment figure. But at 21.20 percent, it’s not bupkis, either.

And as with employment, don’t forget those multipliers (also presented to the right)! Here, the readily available data is scantier, and those I use are from 2012. But clearly the indirect output (and growth) impact will be non-trivial. (These output multipliers come from the Manufacturing Institute of the National Association of Manufacturers.)

Even if the China Virus situation wasn’t still evolving – and possibly dramatically, no one should take these numbers to the bank. Especially important is remembering that none of them take into account the danger that all these jobs and output and income and related business revenue losses bring about the kind of financial system seize-up seen during the financial crisis of 2007-2008. Moreover, although business and entire industry shutdowns will be extensive in the above and other sectors, they won’t be total, or (usually) anywhere close. And the damage will not last forever, or anywhere close.

All the same, we’re talking major drops in employment, incomes, and production – which is exactly why the economic response from Washington needs to focus on getting and guaranteeing money and credit where it’s needed pronto.