(What’s Left of) Our Economy: U.S. Manufacturing Hiring Climbs Back on Track

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aerospace, automotive, Biden, Boeing, CCP Virus, China, coronavirus, COVID 19, Donald Trump, gloves, healthcare goods, Jobs, macinery, manufacturing, masks, non-farm jobs, pharmaceuticals, PPE, private sector, semiconductor shortage, semiconductors, tariffs, transportation equipment, vaccines, Wuhan virus, {What's Left of) Our Economy

As this morning’s February official U.S. jobs report was dominated by a reopening-fueled surge in leiure and hospitality payrolls (which accounted for 355,000 of the month’s total 379,000 sequential improvement), American domestic manufacturing’s employment performance resumed chugging along.

U.S.-based industry gained 21,000 jobs on net last month, recovering from its drop off in January (which was revised down from a decline of 10,000 to one of 14,000). December’s initially reported advance, though, was upgraded from 31,000 to 34,000.

The February results mean that manufacturing has now regained 60.45 percent (824,000) of the 1.363 million jobs lost during the peak CCP Virus lockdowns period of last March and April. Consequently, they show that industry’s reemployment pace has continued to reverse its previous performance as the economy’s pandemic recovery leader.

That status now belongs to the overall private sector, which since last April has regenerated 62.61 percent (13.267 million) of the 21.191 million jobs it shed last spring.

Nonetheless, since public sector net hiring remains very weak, manufacturing’s job-creation performance remains well ahead of that of the economy as a whole – which is viewed by the Labor Department, which compiles and releases these statistics, as the “non-farm sector.” Since April, employment in this combined public and private sector is back up by 12.887 million – representing just 57.63 percent of the 22.362 million jobs they lost together in March and April.

Manufacturing’s biggest February jobs winner by far was transportation equipment (up 9,700 – more than 46 percent of industry’s total employment advance). Since payrolls in the very big automotive sector inched up by just 1,000, it’s likely that much of the rest of the increase came in an aerospace sector whose employment troubles are being healed by Boeing’s comeback from safety woes. But because the aerospace (and other non-automotive transportation) jobs figures are reported one month late, we’ll need to wait until the March report to know for sure.

Other major February manufacturing jobs gainers were miscellaneous non-durable goods (up 4,100), machinery (3,800), plastics and rubber products (3,000) and miscellaneous durable goods (2,800). The increases in miscellaneous non-durables and machinery were especially encouraging, as the former category (as detailed below) includes many of the medical goods vital to the anti-virus fight, and the latter’s products are used throughout not only the manufacturing sector, but other big parts of the economy like construction and agriculture.

The biggest February manufacturing jobs losers were food manufacturing (where payrolls fell by a net 3,100), non-metallic mineral products (2,400), and printing and related support activities (1,700).

Given the continuing struggle against the pandemic, the continuing shortages of many vital products like protective gear, and the surge in vaccine production, the jobs performance of healthcare goods once again underwhelmed – though keep in mind that, as with the non-automotive transportation goods categories, the data here are one month behind, too.

In the broad pharmaceuticals sector, employment actually fell by 700 in January. December’s initially reported 2,200 jobs rise has now been upgraded to 2,300, but this big industry’s payrolls are up just 1.89 percent since last Febuary – the last full pre-pandemic data month.

Hiring was stronger in the pharmaceuticals subsector containing vaccines. January employment rose by just 100 sequentially, but the initially reported December 1,100 payrolls increase was revised up to 1,600. As a result, the subsector’s workforce is now 4.55 percent bigger than last February.

The manufacturing category containing personal healthcare-related protection devices (PPE) like facemasks, gloves, and medical gowns has grown employment most impressively of all these healthcare sectors. But it lost 800 net new jobs in February, a drop that failed to offset the upward revisions of 600 for December. These shifts left employment in this sector 7.98 percent higher than the final pre-pandemic monthly figure.

Notwithstanding January’s workmanlike result, all the pieces still seem to be in place for an accelerating manufacturing jobs rebound: the return of normal economic conditions generally (however choppily), Boeing’s brightening prospects, the continuing need for much more in the way of vaccines and other medical goods, the Biden administration’s stated determination to boost domestic output of CCP Virus-related products, and last – but surely not least – the sweeping tariffs placed by the Trump administration on imports from China that for the near future President Biden apparently will keep.

No one should forget, though, that one strong new headwind has appeared – a global shortage of semiconductors that is already depressing production across manufacturing. Yet even this disruptive event at bottom seems largely due to the unexpected speed of the U.S. economic bounceback, especially in sectors shut down almost entirely, like automotive manufacturing. So whatever the short-term difficulties it causes, the microchip shortage looks like it stems from the kinds of problems, to borrow from an old sports adage, that manufacturing and its workers ultimately would like to have.        

(What’s Left of) Our Economy: As Trump’s Tariffs Stay in Place, U.S. Manufacturing Output Keeps Surging

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aerospace, aircraft, aircraft parts, Boeing, CCP Virus, China, coronavirus, COVID 19, Federal Reserve, gloves, imports, industrial production, inflation-adjusted output, manufacturing, masks, pharmaceuticals, PPE, real growth, recession, tariffs, Trump, Wuhan virus, {What's Left of) Our Economy

It’s tough to describe this morning’s manufacturing production figures from the Federal Reserve (for January) as anything but excellent, and anything but another strong endorsement of the stiff, sweeping tariffs former President Trump imposed on goods, especially from China. By shielding industry from a flood of imports from the People’s Republic, these trade curbs have undoubtedly contributed to a manufacturing recovery that entered its ninth straight month in January, and brought its production to within a whisker of pre-CCP Virus levels.

Moreover, as noted last month, the sector’s prospects seem bright, since not only has the entire economy kept recovering as CCP Virus vaccination proceeds and accelerates, but the aerospace industry revives both from its Boeing safety-related woes and the pandemic-related travel slump, and vaccine production surges.

Domestic manufacturers’ real output rose by 1.04 percent sequentially, increases were broad-based, and revisions were strongly positive. Although December’s previously reported 0.95 percent growth was downgraded to 0.94 percent, November’s was revised up for the second straight time (from 0.83 percent to 1.10 percent), and October’s for a third straight time (from 1.34 percent to 1.51 percent).

Due to these revisions, despite the severely recessionary impact of the CCP Virus both at home and abroad, domestic manufacturing’s inflation-adjusted 2020 production decline now comes in at just 2.01 percent, rather than the 2.63 percent reported last month. In addition, price-adjusted manufacturing output has advanced by 24.11 percent since its April nadir, and is now a mere 0.75 percent below its last pre-pandemic level last February.

As encouraging as the January figures and revisions were was their breadth. In fact, for the second straight month, the constant dollar output improvement came despite a small (0.72 percent) sequential dip in the automotive sector, whose major ups and downs have heavily influenced overall manufacturing production results for much of the pandemic period.

One cautionary note: January monthly after-inflation output growth for the big machinery category – which turns out production equipment for the rest of manufacturing, and devices crucial for other major industries like construction and agriculture – was only 0.52 percent, just half that for the entire manufacturing sector. And revisions were mixed.

More encouraging: Machinery’s growth has been strong enough that its real output is now back to within 1.12 percent of its February pre-pandemic levels.

January also saw accelerating growth in aircraft and parts production. Monthly output in expanded by 2.89 percent in January, December’s strong initially reported 2.78 percent increase is now judged to have been 3.03 percent, and November’s has been upgraded from 2.39 percent to 2.50 percent.

In fact, recovery in these aerospace sectors has been so vigorous that their output is now 6.77 percent greater than their February pre-pandemic levels.

Probably reflecting the vaccine effect, price-adjusted production of pharmaceuticals and medicines increased by 2.42 percent on month in January – the best showing since July’s 2.57 percent. But revisions were mixed, and this vital sector’s real output is only 4.11 higher than in February, just before the pandemic struck the U.S. economy in full force. On the brighter side, immense vaccine demand makes clear that the industry’s upside is enormous for the time being.

As for medical equipment and supplies – including virus-fighting items like face masks,face masks, protective gowns, and ventilators – their production performance keeps lagging badly. Inflation-adjusted output for this category (which encompasses many other products as well) actually fell in January for the second straight month – and by 0.54 percent. In fact, constant dollar output in this sector is 2.18 percent lower than during the last pre-pandemic month of February, 2020.