(What’s Left of) Our Economy: Manufacturing Job Creation Softened a Bit in May; Wages (Literally) Went Nowhere

Tags

Employment, inflation-adjusted wages, Jobs, manufacturing, non-farm jobs, private sector, recession, recovery, wages, {What's Left of) Our Economy

I was on some travel yesterday and couldn’t put out my usual same-day, post. But here’s my analysis of the latest monthly (May) manufacturing figures contained in that morning’s employment report from the Bureau of Labor Statistics:

>U.S. manufacturing job creation shifted into a somewhat lower gear in May, with its 18,000 sequential gain the smallest such improvement since last September’s 6,000. Revisions left the last February through April monthly totals unchanged on net.

>Worse news, moreover, came on the manufacturing wages front. Pre-inflation hourly pay flat-lined on month in May – its worst such results since last November’s similar performance. In addition, April’s previously reported 0.15 percent monthly manufacturing constant dollar wage gain was revised down to 0.15 percent.

>By contrast, overall current dollar private sector wages saw their best monthly improvement (0.30 percent) since December’s 0.38 percent.

>As a result, May’s year-on-year manufacturing wage improvement before inflation totaled only 1.85 percent. Between the previous Mays, pre-inflation manufacturing wages advanced by 2.12 percent.

>These increases also lagged those for the overall private sector, where current dollar wages rose by 2.71 percent on year in May. That was the best such performance since January’s 2.77 percent. And it exceeded the 2.46 percent private sector wage gain between May, 2016 and May, 2017.

>Consequently, the wage gap between manufacturing and the overall private sector widened significantly between last May and this. As of last May, during the current economic recovery, pre-inflation private sector wages had increased 21.24 percent faster than manufacturing wages. This May, the difference was up to 28.13 percent.

>Despite May’s somewhat weaker manufacturing employment growth, the sector’s share of total non-farm employment (the Bureau of Labor Statistics’ U.S. jobs universe) remained at just under 8.53 percent. Last May, manufacturing accounted for just under 8.49 percent of total non-farm employment, meaning that during the last year, manufacturing payrolls have grown slightly faster than American payrolls in general.

>In fact, manufacturing’s May year-on-year job creation (259,000) was a tremendous improvement from the figure between the previous Mays (78,000) and the best annual gain since May, 1998’s 262,000.

>Over the longer-term, however, manufacturing remains a significant job-creation laggard. Since it’s latest employment bottom, in February and March, 2010, it’s regained 1.22 million (53.21 percent) of the 2.293 million jobs lost during the recession and its immediate aftermath.

>The overall private sector lost 8.780 million jobs from the year-end 2007 onset of the recession through February, 2010. Since then, it’s created 19.086 million net new jobs.

>Moreover, since the recession’s onset, the private sector has boosted its employment by 8.88 percent. But manufacturing payrolls are still down 7.81 percent from their December, 2007 levels.

>Manufacturing has been an even worse real wage laggard. The latest inflation-adjusted data go through April, and show that manufacturing couldn’t even match the monthly flat-line in private sector wages. In manufacturing, pay between March and April dipped by 0.09 percent.

>Year-on-year, private sector after-inflation wages inched up only 0.19 percent in April, but even that negligible growth handily beat manufacturing’s 1.10 percent decline. Between the previous April’s inflation-adjusted manufacturing wages improved by 0.55 percent.

>Indeed, both the private sector and manufacturing continue to experience technical real wage recessions (periods of cumulative shrinkage lasting at least two quarters). But in the private sector, such pay is off only 0.09 percent since last May. In manufacturing, real wages are down by this amount since January, 2016.

>And whereas private sector wages are up 4.17 percent in real terms during the current economic recovery (which is nearly nine years old), their manufacturing counterpart gained only 0.37 percent – less than a tenth as much.

Advertisements

(What’s Left of) Our Economy: Strong Manufacturing Jobs Numbers Still Aren’t Moving the Wages Needle

Tags

automotive, Bureau of Labor Statistics, Employment, Great Recession, inflation-adjusted wages, Jobs, manufacturing, non-farm jobs, private sector, recovery, wages, {What's Left of) Our Economy

February’s jobs report showed a continuation of strong employment numbers and weak wage performance in manufacturing. The latest 31,000 monthly jobs gain kept up a streak of strong sequential jobs increases that began in July. Manufacturing’s 224,000 year-on-year payrolls increase was its best such improvement since May, 1998’s 262,000. Revisions boosted the sector’s employment by 28,000 for December and January. Manufacturing has now regained 50.63 percent of the net jobs it lost during the Great Recession, and it since last February, has raised its share of overall U.S. employment from 8.49 percent to 8.51 percent. The automotive sector, moreover, ended a technical jobs recession that had begun in April, 2016.

Yet current dollar wages flat-lined sequentially in February for manufacturing, while they grew by 0.15 percent for the overall private sector. And the yearly manufacturing wage advance of 1.67 percent was the slowest since July, 2015’s 1.49 percent. Further, in real terms, both manufacturing wages and private sector wages are in technical recession, with the former down on net since January, 2016 and the latter since last May.

Here’s my analysis of the latest monthly (February) manufacturing figures contained in this morning’s employment report from the Bureau of Labor Statistics:

>February’s strong monthly employment gains and major upward revisions combined to bolster considerably manufacturing’s recent jobs performance.

>Industry’s payrolls grew by 31,000 sequentially in February, while its January jobs increase was revised up from 15,000 to 25,000, and December’s from 21,000 to 39,000.

>Largely as a result, manufacturing payrolls jumped by 224,000 on an annual basis – the best such performance since May, 1998’s 262,000.

>Between the previous Februarys, manufacturing jobs grew by just 23,000.

>Moreover, the year-on-year figures mean that manufacturing employment has been growing faster than employment in the economy’s non-farm sector (the Bureau of Labor Statistics’ American employment universe).

>Last February, manufacturing accounted for 8.49 percent of total non-farm payrolls. This February, its share stood at 8.51 percent.

>Manufacturing has now regained more than half (50.63 percent) of the 2.293 million jobs it lost since the late-2007 onset of the Great Recession through the sector’s employment bottom in February and March, 2010.

>In addition, the automotive sector – which led domestic manufacturing’s early recovery rebound from the Great Recession – ended its employment recession in February.

>A 6,200 monthly jobs gain in February plus upward January revisions helped the motor vehicles and parts industries out of a period of net employment decline that had begun in April, 2016.

>Yet manufacturing’s sterling employment performance contrasts strikingly with its still-dismal wage performance.

>Whereas overall private sector wages rose 0.15 percent sequentially in February, manufacturing wages recorded no change.

>Industry’s wage revisions were mixed, with January’s 0.11 percent growth now judged to be 0.22 percent, December’s 0.11 percent advance now pegged at 0.19 percent, but November’s 0.15 percent gain revised to zero.

>The year-on-year manufacturing wage picture is no better. Since last February, industry’s pre-inflation hourly pay is up just 1.67 percent – the slowest such rate since July, 2015’s 1.49 percent.

>Worse, between the previous Februarys, manufacturing wages grew a much faster 2.88 percent.

>Current dollar private sector wages have risen 2.61 percent on an annual basis.

>As a result, since the start of the current economic recovery, in mid-2009, pre-inflation private sector wages are up 25.80 percent more than manufacturing wages. A year ago, the gap was only 21.32 percent.

>Manufacturing’s real wage record lately has been even dimmer in absolute and relative terms.

>The latest data go through January, but that month, inflation-adjusted pay in industry fell 0.37 percent sequentially – a bigger drop than that for the overall private sector (0.28 percent).

>Year-on-year, real wages are up 0.66 percent in the private sector in toto versus a 0.29 percent dip for manufacturing.

>And worse still, although both the private sector and manufacturing are suffering real wage recession, the former’s began only last May – with after-inflation hourly pay down 0.28 percent since then.

>For manufacturing, such pay is down 0.09 percent since January, 2016.

>Further, since the current recovery’s mid-2009 onset, overall real private sector wages have risen more than ten times faster (3.98 percent) than manufacturing wages (0.38 percent).

>Over the longer term, moreover, manufacturing remains a significant jobs laggard. Whereas industry has now regained more than half the jobs it lost during the recession and its aftermath, the overall private sector has more than doubled its recessionary job losses. Since shedding 8.780 million positions on net from December, 2007 through February, 2010, it has created 18.569 million.

>In addition, manufacturing employment is still 8.24 percent below its pre-recession peak of 13.746 million jobs, overall private sector employment has risen 8.43 percent during that period.

(What’s Left of) Our Economy: A Turning Point for U.S. Job Quality?

Tags

Employment, healthcare services, Jobs, private sector, public sector, recession, recovery, subsidized private sector, {What's Left of) Our Economy

Although the numbers are still preliminary, the release earlier this month of the January U.S. jobs report provides an unusually good reason to check in on one of RealityChek‘s favorite sets of statistics – the ones that permit calculating the importance of what I call the subsidized private sector (those parts of the economy, notably healthcare services, that are typically considered part of the private sector, but that rely heavily on government spending for its performance in employment and other areas) in the American jobs creation picture.

This distinction matters because most Americans (rightly) believe that private sector employment and its strength or weakness is a much better measure of the economy’s overall health than public sector employment – which largely reflects the decisions of politicians. So if the private sector is being over-counted – which is clear from the failure of most analysts to draw this distinction – that’s big news, and this over-count has been a major feature of most discussions of the current economic recovery.

This latest data bring the story up to the first month of the new year. They include a second (though still preliminary) look at the December numbers (and consequently the full-year 2017 numbers). And they incorporate some revisions going back to the early part of last year. The bottom line is similar to that of RealityChek‘s last update: after surging during the middle part of the recovery, subsidized private sector job creation slowed markedly during the first year of the Trump administration. But another significant development comes through loud and clear, too: During Year One of Trump, growth in payrolls in the public sector proper has ground to a near halt.

First, the new subsidized private sector number, expressed as a share of total job creation for the last few years:

2013: 11.34 percent

2014: 15.97 percent

2015: 23.67 percent

2016: 24.77 percent

2017: 21.49 percent

For good measure, the figure for last month (which will be revised at least twice more): 19.00 percent.

On a standstill basis, here’s how the subsidized private sector’s share of total employment has looked looks at the onset of the last recession (at the end of 2007), at the start of the current recovery, and at the end last year:

December, 2007: 13.22 percent

June, 2009: 14.97 percent

December, 2017: 15.85 percent

For comparison’s sake, in December, 2016, the subsidized private sector’s share of total payrolls was 15.76 percent.

And this is where the dramatic slowdown in government hiring comes in. Here’s how the actual number of government jobs (at all levels) in the U.S. economy has changed annually in recent years:

2013: -57,000

2014: +129,000

2015: +151,000

2016: +206,000

2017: +18,000

Because government jobs are included in the economy-wide job total, much of the reason that the subsidized private’s share in American employment overall kept growing between 2016 and 2017 (from 15.76 percent to 15.85 percent, as shown above), was because the government share fell from 15.34 percent to 15.12 percent.

Yet because the numbers are so big in absolute terms, even this government hiring slowdown has only bent down slightly the growth curve of the subsidized private sector’s importance over the last year, not stopped it, much less thrown it into reverse. That becomes evident upon examining the subsidized private sector’s share of total employment at the start of the recession, the start of the recovery, and for every December starting with 2013:

December, 2007: 13.22 percent

June, 2009: 14.97 percent

December, 2013: 15.43 percent

December, 2014: 15.44 percent

December, 2015: 15.60 percent

December, 2016: 15.76 percent

December, 2017: 15.85 percent

So the type of good news/bad news story that’s been characteristic of many economic trends during the current recovery holds for the prominence of subsidized private sector employment, too. It’s hard to imagine that growth will return to a sound footing until and unless the hiring trends turn decisively in favor of the real private sector.

(What’s Left of) Our Economy: Manufacturing Employment Starts the New Year Sluggishly

Tags

automotive, Bureau of Labor Statistics, Employment, inflation-adjusted wages, Jobs, manufacturing, non-farm payrolls, private sector, recession, wages, {What's Left of) Our Economy

January saw U.S. manufacturing employment rise by 15,000 sequentially, but this monthly gain was the smallest since September’s 6,000 and combined with negative revisions, indicated that the sector’s healthy recent jobs growth might be cooling.

More encouragingly, manufacturing wages before adjusting for inflation rose sequentially for the second straight month (by 0.11 percent), and revisions on this front were positive. Yet industry remained a wage laggard, as overall private sector pay improved by 0.34 percent on month, and topped manufacturing’s annual wage increase by 2.89 percent to 1.90 percent. That manufacturing figure, moreover, represented a deceleration from the 2.73 percent increase between the previous Januarys. Between January, 2016 and 2017, the private sector’s wages increase of 2.40 percent actually trailed the manufacturing wages hike.

Despite the relatively weak employment start to 2018, manufacturing payrolls continued rising slightly faster than those of the economy overall, as its share of total non-farm employment (8.49 percent) was higher than last January’s level (8.47 percent). Automotive employment remained a trouble spot within manufacturing; combined motor vehicles and parts payrolls dipped (by 300) for the first time since October. Worse, the sector remained in a jobs recession, as employment is down on net by 4,600 since July, 2016.

Here’s my analysis of the latest monthly (January) manufacturing figures contained in this morning’s employment report from the Bureau of Labor Statistics:

>Signs of a manufacturing employment slowdown appeared in January’s non-farm payrolls report, as the monthly jobs gain of 15,000 was the lowest such figure since September’s 6,000.

>In addition, December’s 25,000 on-month employment increase was revised down to 21,000, November’s 31,000 improvement is now judged to be 30.000, and October’s 23,000 rise was revised down to 20,.000.

>Pre-inflation manufacturing wages did rise sequentially in January for the second straight month, but industry’s status as a paycheck laggard continued, and the gap between its wage increases and those of the private sector overall widened further.

>The January monthly wage increase of 0.11 percent trailed the private sector’s 0.34 percent.

>December’s 0.11 percent sequential wage rise was revised up to 0.30 percent and November’s 0.15 percent decrease is now judged to be a flat-line.

>But the initially reported December private sector wage advance of 0.34 percent was revised up, too – to 0.41 percent.

>Viewed on a year-on-year basis, manufacturing’s 1.90 percent current dollar wage improvement badly trailed the 2.89 percent increase recorded by the private sector – its best such figure since May, 2009’s 2.93 percent.

>Between the previous Januarys, manufacturing wages rose faster than the private sector’s as a whole – 2.73 percent to 2.40 percent.

>As a result, since the start of the current economic recovery, in mid-2009, pre-inflation private sector wages are up 25.56 percent more than manufacturing wages. A year ago, the gap was only 20.93 percent.

>Although manufacturing employment may be slowing, it’s still increased at a slightly faster rate than total non-farm employment (the U.S. government’s jobs universe) over the last year. In January, 2017, manufacturing jobs represented 8.47 percent of total American jobs. This January, the figure is up to 8.49 percent.

>The January jobs report, however, revealed continuing problems in automotive employment. This sector led industry’s strong growth and employment rebound from the deep recession that ended in mid-2009. But in January, its payrolls shrank sequentially (for the first time since October) by 300, keeping the combined motor vehicle and parts industries in a technical jobs recession.

>Since April, 2016, automotive employment is down on net by 4,600.

>On an annual basis, total manufacturing employment still showed some momentum.

>The January year-on-year payrolls increase of 186,000 was the best such figure since May, 2015’s 189,000. Between the previous Januarys, manufacturing lost 15,000 jobs.

>And since its employment bottom, in February and March of 2010, manufacturing has regained 48.06 percent (1.102 million) of the 2.293 million jobs it had lost since the December, 2007 start of the recession.

>But the overall private sector’s longer-term jobs performance continues to be much better. Since its February, 2010 jobs bottom, employers in this sector have boosted their payrolls by a net 18.232 million – more than twice the 8.780 million net positions lost during the recession and its aftermath.

>And whereas manufacturing employment remains 8.66 percent (or 1.191 million jobs) lower than when that recession began at the end of 2007, private sector employment is up by 8.14 percent (9.447 million jobs).

>On the wage front, moreover, manufacturing’s performance in price-adjusted terms is even worse than in pre-inflation terms.

>The latest figures are for December, and despite rising sequentially by 0.19 percent, real manufacturing wages remained in a long recession.

>Since March, 2016, they are down on net by 0.09 percent.

>Year-on-year, the 0.28 percent December decline in real manufacturing wages contrasts sharply with their 0.93 percent increase between December, 2015 and December, 2016.

>December’s monthly improvement in constant dollar private sector wages (0.28 percent) also exceeded manufacturing’s (0.19 percent).

>As a result, during the current recovery (which is now more than eight years old) real private sector wages are up by 4.27 percent – a meager improvement, but more than five times faster than the 0.84 percent advance in inflation-adjusted manufacturing wages.

(What’s Left of) Our Economy: Another Sign of Wage Stagnation – from the Job Turnover Numbers

Tags

Employment, Great Recession, Jobs, JOLTS, Labor Department, leisure and hospitality, non-farm jobs, professional and business services, recovery, retail, wages, {What's Left of) Our Economy

Since the economy has been moving for quite a while now to full employment (at least as conventionally measured), I haven’t been monitoring the Labor Department’s data on job turnover (the “JOLTS” figures, per the acronym of its official label) as in years past. But yesterday I checked out the numbers reported yesterday morning, and see that this lapse has been shortsighted.

For the JOLTS data are still confirming that the purportedly red-hot, super-tight U.S. labor market is still under-performing according to a key measure – wages. Indeed, the new JOLTS numbers (for November) offer one important explanation: The job openings being advertised by businesses in low-wage industries are outgrowing those in better paying sectors.

The best way to show this trend is to look at the share of total non-farm jobs (the Labor Department’s U.S. employment universe) at key recent points in the business cycle that have been comprised of low-wage jobs, and compare them with the job openings figures at those times.

To remind RealityChek regulars and clue in others, my proxy for low-wage jobs consists of the retail sector, the leisure and hospitality sector, and the big low-wage portion of the professional and business services sector (e.g., janitorial services, landscaping services, call centers, bill-collection services, security services, and the like).

As of November, the hourly wages for these sectors, respectively, were (without adjusting for inflation) $18.28, $15.60, and $20.05. For the private sector as a whole, the hourly wage that month was $26.54.

When the Great Recession broke out, at the end of 2007, these parts of the economy combined represented 26.81 percent of total non-farm employment. When it ended, in the middle of 2009, this share had dropped only to 26.23 percent (by 2.16 percent) – even as overall payrolls dropped by 5.34 percent.

Since then, the low-wage share of all U.S. jobs has risen to 27.74 percent. And the JOLTS data tell the same story – especially during the ongoing recovery.

When the recession began, and low-wage jobs were 26.81 percent of total non-farm employment, they represented 31.94 percent of the job openings advertised by American employers.

During the recession, they were actually in less demand, in absolute and relative terms. In June, 2009, with low-wage jobs accounting for 26.23 percent of the total, such positions represented just 28.38 percent of total job openings. (My figure for the low-wage professional and business services positions is based on their share of jobs in that sector for the month in question. It isn’t broken out in the official JOLTS reports.)   

The results for last November (again, the latest available)? Low-wage jobs had grown as a share of total non-farm employment to 27.74 percent. But as a share of job openings, they had risen much higher – to 34.53 percent.

So because wage lag is still such a prominent feature of the American economy, I’m back on the JOLTS case. When the quality of job opportunities in the labor market starts showing sustained improvement, we’ll have grounds for believing that the long national nightmare of stagnant wages is ending.

(What’s Left of) Our Economy: New Employment Report Sustains the U.S. “Manufacturing Jobs Strong but Wages Weak” Narrative

Tags

Employment, inflation-adjusted wages, Jobs, manufacturing, non-farm employment, recovery, wages, {What's Left of) Our Economy

The major U.S. manufacturing jobs trends ended 2017 intact. Employment rose month-to-month in December by a solid 25,000 and the year-on-year gain of 196,000 was the best since the matching total of February, 2015. Moreover, at 8.51 percent, manufacturing’s share of total non-farm jobs kept inching up, and hit its best level since September, 2016 (which was fractionally higher).

Pre-inflation manufacturing wages rose by 0.11 percent on month in December after a 0.15 percent November decrease, but the yearly improvement of 1.56 percent was less than half that between the previous Decembers (3.21 percent). Moreover, progress in both measures lagged the private sector, and since the current recovery began, private sector paychecks have now outgrown those in manufacturing by 25.50 percent in current dollars – a gap considerably wider than last December’s 20.58 percent.

The technical recession in automotive job creation extended into its twentieth month in December, with employment levels down by 2,400 since April, 2016. But the December monthly employment increase of 1,300 was its second straight monthly gain.

Here’s my analysis of the latest monthly (December) manufacturing figures contained in this morning’s employment report from the Bureau of Labor Statistics:

>December’s non-farm payrolls report showed that both major trends recently shaping the U.S. Manufacturing employment scene remained fully intact as 2017 closed.

>Solid monthly job gains increased, with employment rising by 25,000. And the October sequential gains of 23,000 and 31,000, respectively, remained unrevised.

>Moreover, December’s yearly 196,000 manufacturing jobs increase was the best annual total since the same performance in February, 2015.

>Between the previous Decembers, industry’s payrolls fell by 16,000.

>In fact, manufacturing employment has been growing faster than overall non-farm employment (the Bureau of Labor Statistics’ U.S. jobs universe) since September, 2016, as in December, its 8.51 percent share of total non-farm employment was the highest since that month’s fractionally better share.

>Manufacturing wages, however, are still presenting a contrasting picture. They did rise month-to-month by 0.l1 percent before adjusting for inflation following a 0.15 percent November drop. But as often the case this year, this advance trailed the overall private sector’s 0.34 percent.

>On an annual basis, manufacturing’s 1.56 percent current dollar wage increase lagged both the overall private sector’s 2.50 percent, and the 3.21 percent gain industry recorded between the previous Decembers.

>Consequently, since the current economic recovery began in mid-2009, private sector wages before inflation have risen 25.50 percent faster than manufacturing wages. As of last December,, the gap was 20.58 percent.

>The December increase drove the number of net new manufacturing jobs created since the sector’s February and March, 2010 lows to 1.086 million – or 47.36 percent of the 2.293 million net job nosedive manufacturing suffered from the late-2007 start of the recession through that aforementioned employment bottom.

>But the overall private sector’s longer-term jobs performance has been much better. Since its February, 2010 jobs bottom, employers in this sector have boosted their payrolls by a net 17.782 million – more than twice the 8.780 million net positions lost during the recession and its aftermath.

>In addition, manufacturing employment remains 8.78 percent (or 1.207 million jobs) lower than when that recession began at the end of 2007.

>During the same period, private sector employment is up has grown by 7.76 percent (or 9.002 million jobs).

>Another problem with manufacturing employment continues to be a medium-term slowdown in the automotive sector. Indeed, the vehicle and parts industry has now been stuck in a technical jobs recession (a two quarter of more period of cumulative net decline) that entered its twentieth month in December.

>Although last month’s automotive employment rose sequentially in December for the second straight months (by 1,300), it’s down by 2,400 since April, 2016.

>Even more sobering than the pre-inflation manufacturing wage data are the price-adjusted figures – which have been in technical recession (down by 0.09 percent) since March, 2016.

>The latest numbers are from November, but they fell on month by 0.55 percent, and year-on-year were down 0.37 percent. From November, 2015 to November, 2016, real manufacturing wages rose by 1.21 percent.

>The private sector’s performance has been better, but by no means good. These inflation-adjusted wages are in technical recession, too, having fallen by a cumulative 0.28 percent since May.

>In November, they decreased by 0.28 percent on month and were only 0.19 percent higher than in the previous November.

>From November, 2015 to November, 2016, real private sector wages increased by 0.94 percent .

>As a result, during the current recovery – which is now more than eight years old – real private sector wages are up by 3.98 percent. Slow as that rate of increase is, it’s nearly six times faster than the 0.65 percent increase in after-inflation manufacturing wages.

(What’s Left of) Our Economy: A Key Sign of Better U.S. Job Quality

Tags

Employment, healthcare services, Jobs, non-farm payrolls, private sector, public sector, real private sector, recession, recovery, subsidized private sector, {What's Left of) Our Economy

The U.S. government’s latest jobs report makes clear that the economy is well past the impact of the latest hurricane season, so it’s a great time to see if a new development in the makeup of American employment and hiring that began to appear this year. And last Friday’s non-farm payrolls figures (for November) confirm that it’s still in place: What I call the subsidized private sector is losing some noteworthy steam as a prime engine of the economy’s job creation during the current economic recovery, while the remaining “real private sector” is gaining momentum.

Not that the subsidized private sector – which consists of industries like healthcare, whose levels of output and therefore employment depend heavily on government subsidies – is a spent job-creation force. In fact, its share of total U.S. jobs on a standstill basis remains much higher than either at the start of the ongoing recovery and than at the onset of the last recession. But the growth curve has taken a significant bend down over the past year. And that’s good news if you believe – as you should – that the most sustainable type of job creation is that spawned by the part of the economy that’s shaped overwhelmingly by market forces.

First let’s look at the numbers over the last few years. For the first eleven months of 2017 (the new November figures are of course preliminary), the subsidized private sector accounted for 21.97 percent of all the economy’s net new hiring. That’s still considerably more than its share of employment last month (15.82 percent). But it’s significantly lower than the eleven-month share from last year – 24.12 percent.

In fact, this 2016-2017 decrease is the first such annual decline in several years. From 2013 to 2015, the number grew from 12.28 percent to 15.82 percent to 23.93 percent.

The converse has also been true: The real private sector’s share of total net new job creation has rebounded this year after falling since 2013: Here are those January-November numbers:

2013: 89.58 percent

2014: 80.09 percent

2015: 70.81 percent

2016: 66.47 percent

2017: 75.84 percent

Nonetheless, the subsidized private sector has built up such powerful employment momentum that its share of total non-farm payrolls (NFP) and of real private sector (RPS) jobs keeps growing. Here’s where it’s stood on some key recent dates.

December, 2007 (recession onset): 13.22 percent of NFP, 18.72 percent of RPS

June, 2009 (recovery start): 14.97 percent of NFP, 22.08 percent of RPS

November, 2017 (latest): 15.82 percent of NFP, 22.92 percent of RPS

Yet the momentum has waned a bit more recently, as the data from the last few Novembers shows:

November, 2014: 15.44 percent of NFP, 22.40 percent of RPS

November, 2015: 15.59 percent of NFP, 22.60 percent of RPS

November, 2016: 15.72 percent of NFP, 22.80 percent of RPS

November, 2017: 15.82 percent of NFP, 22.92 percent of RPS

In other words, between November, 2014 and November, 2015, the subsidized private sector’s share of NFP increased by 0.97 percent and of RPS by 0.89 percent.

Between the following Novembers, these growth rates had slowed to 0.83 percent and 0.88 percent, respectively. But they slowed much more significantly over the subsequent year (through last month) – to 0.64 percent and 0.53 percent, respectively.

This slowdown, moreover, could speed up if major changes are made in the nation’s healthcare system, as still seems distinctly possible. In turn, these developments look like a big economic wild card going forward. For now, though, better quality job creation has joined slightly better quality economic growth as two hallmarks of President Trump’s first year in office. Whether he’s had anything to do with them or not, they’re pieces of good economic news that shouldn’t be overlooked.

Those Stubborn Facts: How U.S Manufacturing Helps the Whole Economy – Except for its Own Workers

Tags

Employment, exports, GDP, gross domestic product, Jobs, manufacturing, productivity, research and development, Those Stubborn Facts, wages

Manufacturing share of U.S. employment: 9%

Manufacturing share of U.S. GDP: 12%

Manufacturing share of U.S. productivity growth: 35%

Manufacturing share of U.S. exports: 60%

Manufacturing share of U.S. private sector R&D spending: 70%

Manufacturing share of decline in labor share of GDP since 1990:      more than 2/3

 

(Source: “In Labor vs Capital, Manufacturing Plays an Outsize Role, Report Says,” by Harriet Torry, The Wall Street Journal, November 13, 2017, https://blogs.wsj.com/economics/2017/11/13/in-labor-vs-capital-manufacturing-plays-an-outsize-role-report-says/)

(What’s Left of) Our Economy: October Brings Hurricane Recovery for Manufacturing Jobs, Higher Pay, & Some Positive Milestones

Tags

automotive, Bureau of Labor Statistics, Employment, inflation-adjusted wages, Jobs, manufacturing, recession, recovery, wages, {What's Left of) Our Economy

The new October employment data made clear that manufacturing payrolls are already recovering from hurricane damage earlier this fall, and held up somewhat better during the storms than initially reported. Industry jobs grew sequentially by a net of 24,000 in October, and September’s 1,000 employment loss was revised up to a 6,000 increase. Even some sectors seemingly hardest hit by violent weather lost fewer jobs than first estimated, including chemicals (1,900 rather than 2,000), automotive (2,500 rather than 3,200), and printing and related activities (3,600 to 2,800).

October’s monthly manufacturing wage performance (a 0.19 percent improvement) topped that of the private sector overall (where wages dipped sequentially by 0.04 percent), but the pay gap between the two widened again year-on-year.

Jobs revisions revealed that August’s 44,000 manufacturing jobs gain was the best monthly total since August, 1998’s 141,000. Industry’s total employment rebound since recession lows passed the one million mark (1.028 million). Moreover, its year-on-year jobs increase (156,000) was the best such total since July, 2015’s 168,000. At the same time, a technical recession in net new automotive job creation dragged into its eighteenth month, and manufacturing’s share of total employment, though stabilizing, remained near historic lows.

Here’s my analysis of the latest monthly (October) manufacturing figures contained in this morning’s employment report from the Bureau of Labor Statistics:

>U.S. domestic manufacturing employment fared better during the hurricane-swamped month of September than originally judged, and turned in a strong October, according to the Labor Department’s latest read on the national employment scene.

>Industry added 24,000 net new workers on month in October, according to the Labor Department, and September’s hurricane-affected 1,000 decline in payrolls was revised to a 6,000 job gain.

>The revisions in large part reflected more resilience than first recognized in sectors that apparently took especially hard hits from the storms.

>In particular, the chemicals industry’s September job losses were revised down from 2,000 to 1,900, and in October, the gigantic sector boosted employment by 3,600.

>Similarly, the automotive sector is now judged to have lost 2,500 net jobs in September, not 3,200, and it added 2,400 more in October.

>For printing and related support activities, September’s net job losses are now pegged at 2,800, not 3,600. Its employment levels remained unchanged in October.

>Other sectors whose geography made them seem highly vulnerable to the hurricanes saw their September job losses revised up slightly (notably apparel, and petroleum and coal products). But the changes were marginal.

>Manufacturing wages performed well in October, too, relatively speaking. They advanced by 0.19 percent sequentially before factoring in inflation – as overall hourly private sector pay dipped by 0.04 percent.

>On a longer term basis, however, manufacturing remains a wage laggard. Its October year-on-year pre-inflation wage increase of 1.59 percent significantly trailed the overall private sector’s 2.43 percent.

>This annual rise for manufacturing, moreover, was less than half that achieved between the previous Octobers: 3.54 percent.

>In fact, the current-dollar wage gap between manufacturing and the overall private sector has widened over the last year. Between the mid-2009 beginning of the current economic recovery through this October, pre-inflation private sector wages had risen 21.73 percent faster than their manufacturing counterparts. As of the previous October, the gap was only 17.34 percent.

>Included in the manufacturing jobs revisions was an upgrade for August’s monthly total (from 41,000 to 44,000) that represented the best such performance since August, 1998’s 141,000.

>The latest August payroll rise was all the more impressive for not having followed a major July monthly fall-off. Before that August, 1998 manufacturing job surge, 186,000 jobs in industry had been lost on net the previous month.

>Manufacturing employment also registered noteworthy annual gains. Since last October, its payrolls have expanded by 156,000 – the best such increase since July, 2015’s 168,000. Between the previous Octobers, manufacturing had actually lost 18,000 jobs on net.

>In another positive milestone, the number of jobs recreated in manufacturing since its post-recession employment low point in February and March, 2010 finally passed the one million mark. As of October, 1.028 million of the 2.293 million net jobs lost by manufacturing during the recession and its aftermath have been regained (44.83 percent).

>Nonetheless, manufacturing still lags the rest of the economy employment-wise. In particular, since its bottom (February, 2010), the private sector overall has boosted employment by 17.392 million jobs. That’s nearly twice as many positions as it lost (8.780 million) during the recession and its aftermath.

>In addition, manufacturing employment remains 9.20 percent (or 1.265 million jobs) lower than when that recession began at the end of 2007.

>During the same period, private sector employment has grown by 7.42 percent (or 8.612 million jobs).

>In one discouraging development, a technical recession in automotive job creation (a cumulative decline of two straight quarters of more), continued into its eighteenth month in October. Since April, 2016, employment in this crucial sector is down by 700.

>Somewhat more encouragingly, manufacturing jobs as a share of total non-farm jobs (the Bureau of Labor Statistics’ American jobs universe), has stabilized for now.  But the level — just under 8.49 percent — is close to historic lows.

>The latest inflation-adjusted wage data for manufacturing and overall private sector wages go through September, and paint a pay picture comparable to that created by the pre-inflation data.

>Real manufacturing wages were flat on month in September – by no means good, but better than the private sector’s 0.09 percent decrease. At least the August manufacturing inflation-adjusted wage plunge was pegged at 0.82 percent, not 0.91 percent.

>But since the current recovery began – more than eight years ago – whereas after-inflation manufacturing wages have improved by only 1.21 percent, overall private sector wages are up 4.46 percent.

(What’s Left of) Our Economy: Manufacturing’s Out of its (Short Term) Jobs and Wages Doldrums

Tags

Bureau of Labor Statistics, Employment, inflation adjusted wages, Jobs, manufacturing, non-farm payrolls, recession, recovery, wages, {What's Left of) Our Economy

American domestic manufacturing created 16,000 net new jobs in July on month, its best such performance since February’s 22,000. Coupled with a major (11,000) upward revision for June, the figures demonstrated that U.S. industry has for now emerged from a springtime slump. On an annual basis, manufacturing’s July 66,000 employment improvement was its strongest since February, 2016’s 69,000.

But since the current recovery began, private net job creation has topped manufacturing’s by a factor of nearly 2.5. The same story characterized pre-inflation manufacturing wages. In July, they improved sequentially faster than the private sector’s (0.53 percent to 0.34 percent) but lagged year-on-year (2.42 percent to 2.53 percent) and trailed the previous Julys’ 3.13 percent. And during the current recovery, the private sector’s current dollar wages have increased nearly 20 percent faster than manufacturing’s, although the gap has narrowed year-on-year. But despite its good last two months, manufacturing’s share of total nonfarm employment remained at a record low of 8.47 percent.

Here’s my analysis of the latest monthly (July) manufacturing figures contained in this morning’s employment report from the Bureau of Labor Statistics:

>U.S. domestic manufacturing net new job creation and wage gains both accelerated sequentially in July, pulling the sector out of a sluggish spring on both fronts.

>Industry’s monthly July jobs gain of 16,000 was its best such performance by far since the 22,000 payrolls improvement in February. Moreover, June’s initially reported 1,000 employment increase is is now judged to have been more than ten times greater (12,000).

>Fiurther, the July figures showed that manufacturing payrolls swelled by 66,000 year-on-year in July – the best annual gains since February, 2016’s 69,000.

>Monthly pre-inflation manufacturing wages growth picked up notably as well in July, from an upwardly revised 0.19 percent in June to 0.53 percent. In May, manufacturing paychecks actually fell on a current dollar basis – by an upwardly revised 0.26 percent.

>Manufacturing’s June sequential pre-inflation wage gains equaled those of the overall private sector, and beat the private sector’s 0.34 percent performance in July.

>Over the longer term, however, manufacturing lagged the overall private sector in both respects, although the paycheck gap has been narrowing slightly recently.

>During the current economic recovery, which began in mid-2009, manufacturing employment is now up by 5.96 percent. Private sector jobs as a whole are up by 14.58 percent during this period.

>Since the late-2007 onset of the last recession, manufacturing’s performance is equally poor. From that time to the early 2010 troughs, manufacturing lost 2.293 million jobs and private sector payrolls shrank by 8.801 million.

>Since then, manufacturing has regained just 42.39 percent of those lost jobs (a total of 972,000). The private sector as a whole has boosted employment by 17 million.

>As a result, total private sector employment is now 7.08 percent higher than at the recession’s late-2007 onset, but manufacturing employment is still 9.61 percent lower.

>Therefore, it’s no surprise that manufacturing’s share of total nonfarm employment in July stayed stuck at its all-time low level of 8.47 percent.

>Wage trends reveal the same manufacturing relative weakness. Industry’s July annual current dollar wage gains of 2.42 percent were lower than the overall private sector’s 2.53 percent. They were also much lower than the 3.13 percent increase recorded for manufacturing during the previous Julys.

>Manufacturing wages before inflation have fared little better during the recovery. As of July, they were up by 15.99 percent since the economy resumed expanding in mid-2009. But overall private sector wage increased by 19.06 percent – 19.20 percent faster.

>Last July, though, the gap was bigger – 23.24 percent.

>Manufacturing generally performs even worse on an inflation-adjusted basis. The latest figures are for June, and show a sequential manufacturing gain of 0.18 percent versus a 0.28 percent read for the private sector overall.

>Year-on-year, real manufacturing wages have risen by only 0.55 percent. That’s both slower than the private sector’s 0.94 percent and manufacturing’s own 2.46 percent constant dollar rise between July, 2015 and July, 2016.

>During the entire recovery, overall private sector real wages are up 4.56 percent as of June – 2.87 times faster than the manufacturing real wage improvement (1.59 percent).

>As bad as that comparison looks, it’s actually narrower than the gap last year – when overall private sector wages had increased 3.48 times faster after inflation than manufacturing wages.