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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The worst performers among July’s few maufacturing losers:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(What’s Left of) Our Economy: Revisions Take U.S. Manufacturing’s Solid Pandemic-Era Performance Down a Notch

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aerospace, aircraft, aircraft parts, apparel, appliances, CCP Virus, chemicals, computer and electronics products, coronavirus, COVID 19, durable goods, electrical components, electrical equipment, fabricated metal products, Federal Reserve, furniture, inflation-adjusted output, machinery, manufacturing, medical devices, miscellaneous durable goods, miscellaneous nondurable goods, nondurable goods, nonmetallic mineral products, paper, petroleum and coal products, pharmaceuticals, plastics and rubber products, printing, real growth, recession, semiconductors, textiles, wood products, Wuhan virus, {What's Left of) Our Economy

Sharp-eyed RealityChek readers have no doubt noticed my habit of noting that “final” versions of official U.S. economic data are typically final only “for now.” That’s because Washington’s statistics gathering agencies, to their credit, look back regularly on several years’ worth of figures to see where updates are needed because new information has come in, and this morning, the Federal Reserve released its own such “benchmark” revision of its manufacturing production data.

The results don’t contain any earthshaking changes, but they do alter the picture of domestic industry’s inflation-adjusted growth during the pandemic period, as well as of the performance of specific sectors, in non-trivial ways.

The main bottom lines: First, the Fed previously estimated that U.S.-based manufacturers had increased their constant dollar production from February, 2020 (the month before the CCP Virus’ arrival in force began roiling the entire American economy) through last month, by 4.94 percent. Today, the Fed told us that the advance was just 4.12 percent.

Second, as a result, domestic industry has further to go in real terms to recover its all-time high than the central bank had judged. As of the last regular monthly industrial production increase, U.S.-based manufacturing was 2.41 percent smaller after inflation than in December, 2007 – still its peak. But the new figures show that these manufacturers are still three percent behind the after-inflation output eight-ball.

Third, and especially interesting given the recent, significant U.S. growth slowdown and distinct possibility of a recession before too long, the revisions add (though just slightly) to the evidence that the overall economy’s woes this year are indeed beginning to affect manufacturing. Before the revision, the Fed judged that real manufacturing output had expanded by 2.68 percent between last December and this May, and slipped by 0.07 percent between April and May. The new figures: 2.46 percent and -0.22 percent, respectively.

The virus-era downward revisions affected durable goods and nondurable goods industries alike. The previous price-adjusted growth figure for the former during the pandemic period was 6.31 percent. Now it’s pegged at 5.18 percent. For the latter, the downgrade was from 3.42 percent to 2.99 percent.

Before the revisions, of the twenty broadest sub-sectors of manufacturing tracked by the Fed, only five suffered inflation-adjusted production declines from immediate pre-pandemic-y February, 2020 through this May, and all were found in the nondurables super-category. They were miscellaneous non-durable goods (down 11.43 percent), textiles (down 3.80 percent), paper (2.33 percent), printing and related activities (1.89 percent), and petroleum and coal products (1.21 percent).

The new data show that the number of growth losers has expanded to eight;. Four sectors were added: fabricated metals products (down 1.30 percent), nonmetallic mineral products (1.06 percent), apparel and leather goods (off by 0.59 percent), and furniture and related products (0.17 percent). And petroleum and coal products’ contant dollar production was upgraded from a 1.21 percent decrease during the pandemic period to a 2.96 percent gain.

The names on the list of top five pandemic period growers remained the same, with after-inflation production actually improving in aerospace and miscellaneous transportation (from 18.99 percent to 19.69 percent), miscellaneous durable goods (from 11.41 percent to 12.43 percent), and machinery (from 6.29 percent to 6.52 percent). But real production gains were revised down in computer and electronics products (from 10.42 percent to 7.38 percent), and chemicals (from 8.48 percent to 7.55 percent).

In absolute tems, the biggest price-adjusted output upgrades were registered in miscellaneous nondurable goods (from an 11.43 pecent nosedive to a smaller drop of 7.56 percent), electrical equipment, appliances and components (from a 2.19 percent rise to one of 4.95 percent), the aforementioned petroleum and coal products sector, wood products (from a 5.24 percent increase to 6.45 percent), and plastics and rubber products (from 1.78 percent growth to 2.76 percent).

The biggest real production downgrades came in the printing sector (all the way from a 1.89 percent inflation-adjusted output shrinkage to one of 9.52 percent), apparel and leather goods (from a 4.59 percent real production rise to a 0.59 percent dip), nonmetallic mineral products (from 2.58 percent price-adjusted growth to a 1.06 percent decline), and the aforementioned computer and electronics product sector.

RealityChek has been following with special interest narrower sectors that have attracted unusual attention since the CCP Virus arrived, and the new industrial production revision shows that constant dollar output climbed by more than previously estimated in aircraft and parts (24.89 percent versus 19.08 percent) and medical equipment and supplies (14.48 percent versus 11.51 percent), and by less in semiconductors and other electronic components (22.48 percent versus 23.82 percent) and in pharmaceuticals and medicine (12.79 percent versus 14.78 percent).

These Fed revisions are hardly a reason to push the panic button about U.S. manufacturing. But because domestic industry’s fortunes during the pandemic era have been so closely tied to blazing hot demand for its products, it’s hardly great news to learn that with signs abounding of a slumping American economy, manufacturing is approaching this apparent downturn in less robust shape than thought as late as yesterday.   

(What’s Left of) Our Economy: Will Inflation and a Hawkish Fed Finally Undermine U.S. Manufacturing?

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aerospace, aircraft, aircraft parts, appliances, automotive, capital spending, CCP Virus, coronavirus, COVID 19, electrical components, electrical equipment, Federal Reserve, furniture, inflation, inflation-adjusted output, machinery, manufacturing, medical devices, medicines, non-metallic mineral products, petroleum and coal products, pharmaceuticals, real growth, semiconductor shortage, semiconductors, wood products, {What's Left of) Our Economy

The new (May) U.S. manufacturing production report from the Federal Reserve doesn’t mainly indicate that industry may be facing a crossroads because the sector’s inflation-adjusted output dropped on month for the first time since January.

Instead, it signals that a significant slowdown may lie ahead for U.S.-based manufacturers because its downbeat results dovetail with the latest humdrum manufacturing jobs report (also for May), with results of some of the latest sentiment surveys conducted by regional branches of the Fed (e.g., here), and with evidence of a rollover in spending on machinery and equipment by the entire economy (which fuels much manufacturing output and typically reflects optimism about future business prospects).

Domestic industry shrank slightly (by 0.07 percent) in real output terms month-to-month in May. On the bright side, the strong results of recent months stayed basically unrevised, and April’s very good advance was upgraded from 0.75 percent to 0.77 percent.

Still, the May results mean that real U.S. manufacturing production is now up 4.94 percent since just before the CCP Virus began roiling and distorting the American economy (February, 2020), rather than the 5.07 percent calculable from last month’s report.

May’s biggest manufacturing growth winners were:

>Petroleum and coal products, where after-inflation jumped by 2.53 percent sequentially in May. The improvement was the fourth straight, and the increase the best since February’s 2.68 percent. As a result, constant dollar production in these sectors is now 1.21 percent higher than in immediately pre-pandemic-y February, 2020;

>Non-metallic mineral products, whose 1.78 percent sequential growth in May followed an April fall-off that was revised way down from -0.67 percent to -1.72 percent. March’s 0.76 percent decrease was downgraded to a 1.29 percent retreat, but February’s sequential pop was revised down just slightly to a still outstanding 4.37 percent surge. All told, the sector has grown by 2.58 percent after inflation since February, 2020 – exactly the same result calculable from last month’s Fed release; and

>Furniture and related products, whose 1.23 percent May inflation-adjusted output rise was its first such increase since February’s, and its best since that month’s 4.96 percent surge. Moreover, the May advance comes off an April performance that was revised up from a -0.60 percent sequential dip to one of -0.12. In all, these results were enough to move real furniture production above its Februay, 2020 level – by 0.08 percent.

May’s biggest manufacturing production losers were:

>wood products, whose 2.56 percent real monthly output decline was its first decrease since January and its worst since February. 2021’s 3.65 percent. Moreover, April’s previously reported 1.13 percent advance is now estimated to have been just 0.97 percent – all of which means that constant dollar production by these companies is now 5.24 percent higher than just before the pandemic arrived, not the 7.85 percent calculable last month;

>machinery, whose May inflation-adjusted output sank by 2.14 percent – the biggest such setback since February, 2021’s 2.59 percent. As known by RealityChek readers, machinery production is one of those aforementioned indicators of capital spending because it’s sold to customers not just in manufacturing but throughout the economy.

It’s true that machinery’s revisions were mixed. April’s after-inflation production increase was upgraded all the way fom 0.85 percent to 1.69 percent – its best such performance since last July’s 2.85 percent. But March’s performance was revised down from 0.36 percent to one percent shrinkage, and February’s increase was revised up again, but only from 1.17 percent to 1.22 percent. Consequently, whereas as of last month, machinery production was 8.31 percent higher in real terms than in February, 2020, this growth is now down to 6.29 percent.

>electrical equipment, appliances and components, where real output sagged for the second consecutive month, and by a 1.83 percent that was its worst such monthly performance since February, 2021’s 2.34 percent decrease. Revisions were modest and mixed, with April’s previously reported 0.60 percent sequential drop upgraded to -0.42 percent, March’s downgraded 0.04 percent dip upgraded to a 0.19 percent gain, and February’s real output revised up again – from 2.03 percent to 2.08 percent. These moves put real growth in the sector post-February, 2020 at 2.19 percent, less than half the 5.55 percent calculable last month.

By contrast, industries that consistently have made headlines during the pandemic delivered solid May performances.

Aircraft- and aircraft parts-makers pushed their real production up 0.33 percent on month in May, achieving their fifth straight month of growth. Moreover, April’s excellent 1.67 percent sequential production increase was upgraded to 2.90 percent (the sector’s best such result since last July’s 3.44 percent), March’s estimate inched up from a hugely downgraded 0.47 percent to 0.50 percent, and the February results were upgraded again – from 1.34 percent to 1.49 percent. This good production news boosted these companies’ real output gain since immediately pre-pandemic-y 16.37 percent to 19.08 percent.

The big pharmaceuticals and medicines industry performed well in May, too, as after-inflation production increased by 0.42 percent. Revisions were overall negative but small. April’s initially reported 0.20 percent real output slip is now judged to be a0.15 percent gain, but March’s upwardly revised 1.23 percent increase is now pegged at only 0.32 percent, and February’s downwardly revised 0.96 percent constant dollar output drop revised up to -0.86 percent. All told, inflation-adjusted growth in the pharmaceuticals and medicines sector is now up 14.78 percent since February, 2020, as opposed to the 14.64 percent increase calculable last month.

Medical equipment and supplies firms fared even better, as their 1.44 percent monthly real output growth in May (their fifth straight advance) was their best such result since February, 2021’s 1.53 percent. Revisions were positive, too. April’s previously recorded 0.06 percent dip is now estimated as a 0.51 percent increase, March’s downgraded 1.28 percent figure was upgraded to 1.41 percent, and February’s 1.46 percent improvement now stands at 1.53 percent. These sectors are now 11.51 percent bigger in terms of constant dollar output than they were just before the CCP Virus arrived in force – a nice improvement from the 8.92 percent figure calculable last month.

May also saw a production bounceback in the shortage-plagued semiconductor industry. Its inflation-adjusted production climbed 0.52 percent on month, but April’s previously reported 1.85 percent drop – its worst such performance since last June’s 1.62 percent – is now judged to be a 2.25 percent decline. At least the March and February results received small upgrades – the former’s improving from a previously downgraded 1.83 percent rise to 1.92 percent, and February’s upgraded growth of 2.91 percent now estimated at 2.96 percent. The post-February, 2020 bottom line: After-inflation semiconductor production is now 23.82 percent higher, not the 23.38 pecent increase calculable last month.

And since the automotive industry’s ups and downs have been so crucial to domestic manufacturing’s ups and downs during the pandemic era, it’s worth noting its 0.70 percent monthly price-adjusted output growth in May.

Revisions overall were negative. April’s previously reported 3.92 percent constant dollar production growth was revised down to 3.34 percent, March’s 8.28 percent burst was upgraded to 8.99 percent (the best such result since last October’s 10.64 percent jump), and February’s previously upgraded 3.86 percent inflation-adjusted production decrease was downgraded to a 4.24 percent plunge.

But given that motor vehicle- and parts-makers are still dealing with the aforementioned semiconductor shortage, these numbers look impressive, and real automotive output is now 1.17 percent greater than in pre-pandemic-y February, 2020, as opposed to the 0.77 percent increase calculable last month.

Domestic manufacturing has overcome so many obstacles since the CCP Virus’ arrival that counting it out in growth terms could still be premature. But an obstacle that it hasn’t faced since the pandemic-induced downturn have s looming again — a major economy-wide slowdown and possible recession that could result from monetary tightening announced by the Federal Reserve to fight torrid inflation.  And with the world economy likely to stay sluggish as well and limit export opportunities (see, e.g., here), the possibility that industry’s winning streak finally ends can’t be dismissed out of hand.  

(What’s Left of) Our Economy: The New Official U.S. Manufacturing Data Look Anything but Recession-y

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aerospace, aircaft, aircraft parts, appliances, automotive, electrical equipment, electronic components, Federal Reserve, furniture, industrial production, inflation, machinery, manufacturing, medical devices, medicines, metals, non-metallic mineral products, pharmaceuticals, plastics and rubber products, semiconductor shortage, semiconductors, supply chains, transportation equipment, Ukraine, wood products, {What's Left of) Our Economy

Today’s Federal Reserve industrial production report (for April) is making clearer than ever that if the U.S. economy is headed for a recession or a major growth slowdown, domestic manufacturing won’t deserve significant blame unless it takes a major nosedive before too long.

The report showed that despite the Ukraine war, despite ongoing supply chain snags, despite torrid inflation, and despite Federal Reserve plans to cool these price rises with interest rate hikes that will almost have to moderate growth if they work, U.S.-based industry increased output for the seventh straight month – and by a thoroughly respectable 0.75 percent.

Moreover, modest and mixed revisions left those strong recently results entirely intact. As a result, since February, 2020 – the last full data month before the CCP Virus’ arrival in force began upending the economy – domestic manufacturing has grown in real terms by 5.07 percent, up from the 4.42 percent calculable from last month’s release. In addition, in constant dollars, these sectors’ production is now within 2.29 percent of its all-time high – reached in December, 2007, just as the Great Recession triggered by the global financial crisis was beginning.

The list of April’s main manufacturing growth leaders was headed by the volatile automotive sector, but many of the biggest industry sub-sectors tracked by the Fed enjoyed healthy expansions last month.

Especially encouraging about the combined performance of vehicle and parts makers – which continue to be plagued by the global semiconductor shortage – was the follow-through. Their vigorous April sequential 3.92 percent after-inflation output increase followed a March gain upgraded from 7.80 percent to 8.28 percent, and that represented the biggest monthly advance since last October’s 10.64 percent. And that result followed a September tumble of 6.32 percent. Moreover, February’s big monthly dropoff was upgraded again, to a 3.86 percent loss.

All told, price-adjusted automotive output in April moved above its February, 2020 immediate pre-pandemic level (by 0.77 percent) for the first time since July, 2020.

A banner April also was registered by aerospace and miscellaneous transportation equipment companies. They boosted inflation-adjusted production by a sequential 2.15 percent. But March’s initially reported 1.90 percent after-inflation increase – previously the best monthly performance since last July’s 4.21 percent jump – is now judged to be a negligible 0.08 percent rise, February’s downgraded 1.64 percent real production improvement, however, was revised up to 1.82 percent, leaving these businesses 17.28 percent larger than in February, 2020 – as opposed to the 16.43 percent growth calculable from last month’s Fed report.

Inflation-adjusted primary metals production rose on month by 1.36 percent in April, and March’s initially reported 1.69 percent sequential drop – the biggest since January’s 2.53 percent plunge – is now judged to be just 0.75 percent. And February’s already upwardly revised constant dollar production surge was upgraded again – to a 2.94 percent figure that’s still the best since last April’s 3.48 percent. After-inflation production of these metals is now 4.01 percent greater than in February, 2020, compared with the 1.16 percent calculable last month;

Wood products output expanded nicely in real terms, too – by 1.13 percent sequentially in April. This improvement pushed this industry’s price-adjusted production to 7.85 percent above its immediate pre-pandemic level.

And consistent with manufacturing’s overall output winning streak, machinery production continued in April continued to excel as well – although more unevenly. Real output in this bellwether sector – whose products are used so widely throughout the economy – climbed by 0.85 percent sequentially in April. And although March’s results were revised way down from 0.78 percent growth to 0.36 percent contraction, February’s previously reported and downgraded 0.54 percent improvement was revised way up to 1.17 percent. As a result, the sector is now 8.31 percent bigger after inflation than in immediately pre-pandemic February, 2020.

The biggest April manufacturing growth losers were:

>plastics and rubber products, where a March real output increase of a sharply downgraded 0.58 percent was followed by a 0.79 percent decrease that was the biggest monthly decline since December’s 0.94 percent. February, moreover, saw another discouraging revision – from a 3.14 percent constant dollar monthly advance to 2.80 percent. At least that result still was the best since August, 2020’s 3.85 percent. Consequently, this sector is now just 1.05 percent bigger in real output terms than in February, 2020 – as opposed to the 3.56 percent calculable last month;

>non-metallic mineral products, where inflation-adjusted production dipped for a second straight month – this time by 0.67 percent. March’s drop, however, is now pegged at only 0.76 percent instead of 1.15 percent, and February’s upgraded real output burst of 3.94 percent is now estimated at 4.42 percent, its best such performance since the 9.19 percent increase in May, 2020, early during the rapid recovery from the steep recession caused by the CCP Virus’ first wave and associated economic and behavioral curbs. But whereas as of last month’s industrial production report, these sectors had grown by an inflation-adjusted 3.28 percent since February, 2020, this figure is now down to 2.58 percent.

>electrical equipment, appliances, and components, where real output fell for a second straight month. The April sequential decrease was 0.60 percent and followed a 0.04 percent March drop that was first reported as a 1.03 percent increase. Fortunately, February’s results were upgraded a second time, to a 2.03 percent advance that’s still the sector’s best since last July’s 3.24 percent. But the net result is a group of industries that’s now only 3.55 percent larger in real output terms than in February, 2020, as opposed to the 5.55 percent calculable last month; and

>furniture and related products, whose price-adjusted output decreased in April for the second straight month. The 0.60 percent monthly retreat means that these sectors have shrunk by an inflation-adjusted 1.56 percent since February, 2020.

Growth, however, generally tailed off in April in industries that consistently have made headlines during the pandemic.

The aircraft and aircraft parts sectors were the out-performers. Their real output rose on month in April by a strong 1.67 percent. But even here, March’s initially reported even better 2.31 percent increase is now pegged at just 0.47 percent. The February estimate, however, bounced back from a downgraded 1.13 percent gain to an improvement of 1.34 percent, helping the sector to register 16.37 percent real production growth since February, 2020, compared with the 15.86 percent calculable last month.

Inflation-adjusted output in the big pharmaceuticals and medicines industry dropped sequentially in April for the third time in the last four months. More encouragingly, that 0.20 percent decline followed March growth that was revised up from 1.17 percent to 1.23 percent. But February’s 1.15 percent decrease is now estimated at a still dreary 0.96 percent retreat, and January’s previously upgraded 0.45 percent increase is now thought to be a contraction of 0.26 percent. So where as of last month, real pharmaceuticals and medicines output was reported as 14.75 percent higher than in immediately pre-pandemic-y February, 2020, that growth is now down to 14.64 percent.

As for medical equipment and supplies, these sectors suffered their first monthly production decline (0.06 percent) since December’s 0.68 percent. In addition, March’s previously reported 1.81 percent rise was revised down to 1.28 percent, February’s previously upgraded 1.73 percent increase was cut back to 1.46 percent, and January’s upwardly revised gains were trimmed from 3.28 percent to 2.94 percent. As a result, these industries’ post-February, 2020 real production increase is now estimated at 8.92 percent, down from the 10.28 percent improvement calculable last month.

Even semiconductor output took a hit in April. The shortage-plagued sector saw real production sink by 1.85 percent sequentially last month – its worst such performance since last June’s 1.62 percent. Revisions were mixed, with March’s initially reported 1.99 percent constant dollar advance reduced to 1.83 percent; February’s big jump upgraded again to 2.91 percent; and January’s fractional 0.05 percent increase revised up to 0.06 percent. These results still left price-adjusted semiconductor production up 23.38 percent since February, 2020, but that figure is down from the 25.99 percent calculable last month.

An entirely new hurdle to domestic manufacturing output could appear in late June. That’s when the Fed’s data gatherers tell us they’ll issue their next annual benchmark revision – which could reveal that U.S.-based industry’s performance has been weaker in recent years than they’d thought. At the same time, it could turn out to be stronger.  Given how domestic manufacturing has overcome so many other headwinds recently, that would be an upside surprise that I at least wouldn’t find completely surprising.   

(What’s Left of) Our Economy: U.S. Manufacturing Job Creation Gains More Momentum

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aircraft, aircraft engines, aircraft parts, automotive, CCP Virus, coronavirus, COVID 19, Employment, Federal Reserve, furniture, inflation, Jobs, machinery, manufacturing, miscellaneous durable goods, non-farm payrolls, personal protective equipment, pharmaceuticals, plastics and rubber products, PPE, recession, semiconductor shortage, semiconductors, supply chains, transportation equipment, Ukraine-Russia war, vaccines, {What's Left of) Our Economy

Today’s official April U.S. jobs report featured such a strong showing by U.S.-based manufacturers that, by one measure, they reclaimed title of America’s best job-creating sector during the CCP Virus era (and its aftermath?).

Domestic industry boosted its payrolls sequentially last month by 55,000 workers, its best such performance since July’s 62,000 gain. In addition, revisions were excellent. March’s initially reported 38,000 increase is now pegged at 43,000, and February’s upgraded 38,000 rise is now judged to have been 50,000.

As a result, manufacturing’s share of U.S. non-farm employment (the federal government’s definition of the American jobs universe), has improved from 8.38 percent in February, 2020 – the last full data month before the virus began roiling the national economy – to 8.41 percent as of last month.

And during this period, manufacturing’s share of America’s private sector jobs is up from 9.83 percent to 9.86 percent.

Domestic industry has recovered a slightly smaller share of the jobs it lost during the sharp pandemic-induced downturn of spring, 2020 (95.89 percent) than the private sector (97.62 percent). But it also shed fewer jobs proportionately than the rest of the private sector during that terrible March and April. (For the record, because of a drag created by public sector hiring, the share of all non-farm jobs regaine d now stands at 94.59 percent.

In all, U.S.-based manufacturing employment is now down a mere 0.44 percent from immediate pre-pandemic-y February, 2020.

April’s manufacturing jobs winners were broad-based, but the biggest among the major sectors tracked by the Labor Department were:

>transportation equipment, whose 13,700 employment improvement was its best such performance since last October’s 28,200. (Last month I erroneously reported that the sector’s best recent monthly performance was last August’s 19,000.) Unfortunately, March’s initially reported employment advance of 10,800 was revised down to 8,800, and February’s previously estimated 19,800 jobs plunge (the worst monthly performance since April, 2021’s automotive shutdown-produced nosedive of 48,100) is now judged to be 19,900. Bottom line: This sector’s employment levels are still 3.38 percent below those of that last full pre-pandemic data month of February, 2020;

>machinery, where 7,400 jobs were added on month – an especially encouraging result since its products are so widely used throughout the rest of manufacturing and the entire economy. Even better, March’s initially reported 1,700 employment increase was revised all the way up to 6,700, and February’s perfomance – which had been revised down from an 8,300 rise to one of 6,600, recovered a bit to 6,700. As a result, machinery employment is off just 1.55 percent from its February, 2020 levels;

>automotive, which boosted headcounts by 6,400 – its best monthly gain since last October’s 34,200 plant reopening-driven burst. But March’s initially reported 6,400 jobs rise was downgraded to 3,600, and even though February’s major job losses were revised for the better again, they’re still pegged at 14,000 – the worst since the 49,100 employees shed during the shutdowns last April. These gyrations have left the combined vehicles and parts workforce 0.78 pecent smaller than in February, 2020;

>plastics and rubber products, which upped employmment by 5,700 sequentially in April, the best such performance since last August’s 7,800. Job-wise, these sectors are now 3.38 percent larger than in February, 2020.

The only significant jobs losers in April were furniture and related products and miscellaneous durable goods. The former lost 1,100 positions in April, but employment has still inched up by 0.57 percent since pre-pandemic-y February, 2020. The latter – which includes much of the protective gear needed to fight and contain the CCP Virus – reduced employment by 1,400 sequentially last month. But this decrease was the first since last August’s 600 loss, and followed a strong 3,100 jobs gain in March. This catch-all category’s employment is now 1.54 percent higher than in February, 2020.

As always, the most detailed employment data for pandemic-related industries are one month behind those in the broader categories, and as with the rest of domestic industry for March, their employment picture showed improvement overall.

The semiconductor and related devices sector is still struggling to meet demand, but hiring continued its slow-but-steady pandemic-era increase in March with job gains of 700. February’s initially reported 100 employment loss now stands at a 100 employment gain, and January’s numbers stayed at plus-300 – the best monthly performance since last October’s 1,000. This sector now employs 1.34 percent more workers than in February, 2020 – impressive since during the sharp spring, 2020 economic downturn, it kept adding jobs.

The latest employment results were mixed for surgical appliances and supplies makers – a category within the aforementioned miscellaneous durable goods sector, and one in which personal protective equipment and similar medical goods abound. In March, the industry added 1,100 workers, but revisions completely wiped out February’s initially reported 800 jobs gain. The January hiring increase stayed at a downwardly revised 1,300. Even so, since just beforet the pandemic’s arrival in force in the United States, these companies have increased payrolls by 4.07 percent.

The very big pharmaceuticals and medicines industry continued to be a moderate employment winner in March. It hired an additional 900 workers on month, and though its February improvement was downgraded (from 1,300 to 1,000), the number was solid. Moreover, January’s hugely upgraded 1,100 employment rise stayed intact. Since February, 2020, this sector’s headcount is up fully 9.23 percent.

March jobs gains were more subdued in the medicines subsector containing vaccines, but they still totaled 400. February’s initially reported employment increase of 800 is estimated at just 500 now, and January’s identical increase stayed the same. But over time, this industry’s jobs growth has been impressive – 23.15 percent since the last pre-pandemic data month of February, 2020.

Good job gains continued in March in the aviation cluster as well. Aircraft manufacturers (including still-troubled industry giant Boeing) rose by 1,100 sequentially – the best monthly gain since last June’s 4,400. February’s increase was upgraded from 500 to 600, but January’s sequential job loss stayed unrevised at 800. This net increase brought aircraft employment to within 11.08 percent of its February, 2020 level.

The aircraft engines and engine parts industry followed February’s unrevised 900 hiring increase by adding 500 more workers in March. January’s results, however, stayed at a slightly downgraded 900 loss. And these companies’ still employ 12.65 percent fewer workers than in February, 2020.

The deep jobs depression in the non-engine aircraft parts and equipment sector remained deep in March, but a little less so. Jobs gains for the month totaled 700, February’s initially reported 200 increase was unrevised, and January’s way upwardly revised job rise was downgraded only from 1,500 to 1,400. But since just before the pandemic, the non-engine aircraft parts and equipment sector has still shrunk by 15.74 percent.

Having recently navigated its way skillfully through a once-in-a-century pandemic, a virtual shutdown of the entire U.S. economy, continuing supply chain disruption, multi-decade high inflation, a major war in Europe (so far), former export champ Boeing’s woes, and sluggish-at-best growth in much of the foreign markets it relies on heavily, it’s tempting to say that U.S-based manufacturing will have finally met its match if the Federal Reserve’s inflation-fighting campaign dramatically slows growth domestically — or worse.  But since the pandemic began, the next time the manufacturing pessimists are right will be the first.       

 

(What’s Left of) Our Economy: U.S. Manufacturing Growth is Overcoming the Ukraine War, Too

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aerospace, aircraft, aircraft parts, appliances, automotive, electrical components, electrical equipment, Federal Reserve, furniture, inflation, logistics, machinery, manufacturing, medical devices, medical equipment, metals, monetary policy, non-metallic mineral products, pharmaceuticals, printing, semiconductors, supply chains, textiles, transportation, {What's Left of) Our Economy

My day got away from me yesterday, so I couldn’t finish up my report on that morning’s Federal Reserve’s newest U.S. manufacturing production figures (for March) till now. But they’re worth examining in detail because although they’re the first such data to be released since the Ukraine war broke out and began disrupting global supply chains for important goods, they strongly resembled last month’s statistics – which were the final pre-war figures.

And just as interesting: Many of the results for individual industries illustrated strikingly the roller coaster ride on which much of domestic industry remains, with multi-month bests in particular coming right on the heels of multi-month worsts. Moreover, underscoring much of the uncertainty created by Ukraine-related tumult coming on top of (and in China’s case, alongside) CCP Virus-related tumult, some revisions of previous months’ readings were unusually large.

In inflation-adjusted terms, American manufacturing output grew 0.87 percent sequentially in March. The increase was powered largely by a 7.80 percent monthly jump in real output in the exceptionally volatile automotive sector. But even stripping out vehicles and parts production, price-adjusted manufacturing production improved by 0.40 percent in March.

In addition, revisions were mildly positive. February’s initially reported 1.20 percent constant dollar month-on-month production increase – the best such performance since last October’s 1.71 percent – was upgraded to 1.22 percent. January’s downwardly revised 0.03 percent improvement is now estimated at 0.11 percent. And December’s small dip was revised up again – from -0.06 percent to -005 percent.

Consequently, since the last full data month before the CCP Virus began roiling the U.S. economy (February, 2020), domestic manufacturing has expanded by 4.42 percent – up from the 3.37 percent calculable last month.

At the same time, U.S.-based industry is still 2.91 percent smaller than at its all-time peak – reached just before the Great Recession in December, 2007 – although that’s up from the 3.88 percent deficit calculable last month.

March’s biggest manufacturing production winners were:

>automotive, as mentioned above. That was the biggest sequential gain since last October’s 10.64 percent, but it follows a February drop that’s been downgraded from 3.55 percent to 4.64 percent. And that was the worst monthly figure since last September’s 6.32 percent. All these (and previous) ups and downs left after-inflation vehicle and parts production 3.50 percent below their immediate pre-pandemic (February, 2020) levels;

>aerospace and miscellaneous transportation, where after-inflation production rose by 1.90 percent on month. The February advance, was downgraded substantially, from 3.22 percent to 1.64 percent, leaving the March increase the biggest since last July’s 4.21 percent. These industries are now 16.43 percent larger in real terms than in February, 2020;

>electrical equipment, appliances and components’ price-adjusted production climbed 1.03 percent sequentially and February’s increase was revised all the way up from 0.48 pecent to 1.95 percent– best since last July’s 3.24 percent. Inflation-adjusted output in these sectors is now 5.55 percent above thei February, 2020 levels; and

>plastics and rubber products, which displayed a similar pattern. Real output was up 1.14 percent sequentially in March, and February’s results were more than doubled – from +1.46 percent to +3.14 percent. That burst – the best since August, 2020’s 3.85 percent – left constant dollar production for these industries 3.56 percent greater than in immediate pre-pandemic-y February. 2020

In addition machinery, which is such a bellwether for both the rest of industry and the entire economy because of the widespread use of its products, price-adjusted output in March improved by 0.78 percent over February’s results. And although the February improvement was downgraded from 0.78 percent to 0.54 percent, after-inflation machinery production is still up 8.29 percent since February, 2020.

The biggest March manufacturing growth losers were:

>non-metallic mineral products, whose 1.15 percent March monthly decline was the worst such figure since last May’s 2.29 percent decrease. But this drop-off followed a February monthly surge that was upgraded from 3.46 percent to 3.94 percent – the .best such showing the 4.34 percent of June, 2020 – early in the recovery from the deep economic downturn triggered by the first wave of the CCP Virus and related lockdowns and behavioral curbs. Real output in this sector has now risen by 3.28 percent since February. 2020;

>primary metals, where similarly. March’s 1.69 percent fall was the biggest since January’s 2.46 percent drop – and followed a February 2.26 percent increase that was upgraded from the previously reported 2.10 percent and represented the best monthly performance last April’s 3.48 percent. Primary metals inflation-adjusted output is now 1.16 greater than in Februrary, 2020;

>furniture and related products’ after-inflation production sank by 1.51 percent from February to March – the worst such figure since February, 2021’s 3.21 drop. But March’s lousy results followed a February increase that was also more than doubled – from 2.52 percent to a 5.63 jump that was this sector’s best since June 2020’s 5.66 percent. These results brought real output in furniture and related products to within 0.80 percent of its immediate, February, 2020 pre-pndemic level;

>textiles’ 1.46 percent monthly March real output decrease was its worst monthly result since January’s 2.30 percent drop. But it, too, followed a strong February. That month’s improvement was upgraded from 0.03 percent to 0.97 percent – the biggest monthl increase since September’s 1.36 percent. Yet in real terms, the industry is still 5.84 percent smaller than in February. 2020;

>and printing and related support activities. It’s 1.10 percent March sequential after-inflation output retreat was also its worst since January’s 2.16 percent decrease. But it, too, followed a strong February. Indeed, that months’ inflation-adjusted production increase was revised up from 1.66 percent to 2.66 percent – its best such performance since last May’s 2.75 percent rise. This cluster, though, has still shrunk by 4.69 percent in constant dollar terms since February. 2020.

Growth was solid, too, in industries that consistently have made headlines during the pandemic.

In the aircraft and aircraft parts sector, real production increased in March by 2.31 percent. Because February’s initially reported 2.52 percent monthly rise was marked all the way down to 1.13 percent, the March figure became these industries’ best since last July’s 3.44 percent (which I mistakenly reported last month was an August total). January’s results were downgraded, too – and for a second time, to 0.91 percent. But the sector is still 15.86 percent bigger than it was after inflation than in February, 2020.

The big pharmaceuticals and medicines sector turned in a more mixed performance. March’s 1.17 percent price-adjusted monthly production increase was the best such total since last August’s 2.39 percent. But February’s initially reported 1.08 percent gain is now reported as a 1.15 percent loss. January’s constant dollar production change, however, was revised up from a 0.14 percent drop to a 0.45 percent increase. All told, pharamaceuticals and medicines production is 14.75 percent higher afte inflation than in February, 2020.

But the news was unambiguously good in the medical equipment and supplies sector that contains so many of the products needed to fight the pandemic. The March inflation-adjusted output improvement was 1.81 percent and February’s production growth was upgraded from 1.39 pecent to 1.73 percent. Further, the January after-inflation growth figures – which had already been revised up from 2.50 percent to 3.26 percent – was upgraded further to 3.28 percent. And a December result that was first reported as a decline of 2.75 percent is now estimated to be a dip of just 0.37 percent. All told, output in these sectors has increased by 10.80 percent since immediately pre-pandemic-y February, 2020.

And although the national and global semiconductor shortage persists, U.S. domestic production kept rising healthily. Output in March improved month-to-month by 1.99 percent adjusted for inflation, February’s initially reported rise of 1.96 percent was upgraded to 2.87 percent (the best such growth since April, 2017’s 3.78 percent), and January’s downwardly revised 0.37 percent sequential output decline was revised up to a 0.05 percent gain. As a result, semiconductor production is upfully 25.99 percent over its immediate pre-pandemic levels.

The March manufacturing production figures portray a domestic industry resilient enough to withstand not only pestilence but (so far) war and the beginnings of tighter Federal Reserve monetary policy aimed at slowing U.S. growth in the name of reducing  inflation. No one knows what catastrophes the future may hold, or how much more the aforementioned problems could worsen. But it’s looking like any force powerful enough to derail American manufacturing for long may need to be truly Biblical in its proportions.