(What’s Left of) Our Economy: Job Creation in America’s Genuine Private Sector Has Weakened Markedly

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

Year-end data are often the gifts that keep on giving for anyone following the economy, and last Friday’s official monthly U.S. employment report (for December) turned up another one on top of the manufacturing figures I posted on yesterday – further confirmation that job creation in the private sector has slowed significantly, and that a surging share of this hiring doesn’t deserve the “private sector” label.

Instead, these jobs have come in industries heavily dependent on government spending – especially in healthcare services, which are of course massively subsdized by progams such as Medicare and Medicaid.

And their resurgence in relative terms reveals one way in which the U.S. labor market is returning to a pre-CCP Virus – and troubling – normal.

This “subsidized private sector”(SPS) of course mostly serves vital social purposes (though questions can certainly be raised about the importance of the the for-profit educational institutions and social service agencies also included in this category). But since productivity and innovation in this part of the economy is undoubtedly lower than in the “real private sector” (RPS), its increasing prominence in the national employment picture could weaken the country’s ability to raise living standards on a sustainable (as opposed to bubble-ized) basis.

One of the most eye-popping examples of this trend took place in the most recent revision of the November statistics. As reported last month, the initial November figures pegged total private sector job creation as up by 221,000 on month – among the year’s lowest increases. SPS hiring for the month amounted to 37.10 percent of this total, and just under 60 percent of the workers added in the RPS. Those were the highest such shares going back to January, 2021, by which time the worst of the distortions wreaked by the CCPVirus on labor markets and the rest of the economy (including of course in health care) clearly had passed.

But those revisions! Last Friday’s release estimated that the overall private sector boosted employment by just 202,000 – the worst such performance since the 108,00 loss of December, 2020. But SPS jobs as a share of total private sector job growth was upgraded to 44.55 percent, and the new SPS positions jumped to 80.36 percent of RPS number.

In December, at least preliminarily, total private sector hiring rebounded to 220,000. Moreover, the SPS employment advance for the month dropped to 35.45 percent of private sector job creation and 54.93 percent of the RPS gain. But those last two percentages were still the second highest since te beginning of 2021.

The longer term figures show that much more clearly how powerful this trend has become. During the first six months of last year, here’s how many net new jobs the private sector (PS), the SPS, and the real private sector created:

PS: 2.626 million

SPS: 0.599 million

RPS: 2.027 million

The absolute totals for the second half of 2022?

PS: 1.577 million

SPS: 0.531 million

RPS: 1.046 million

So although hiring slowed substantially in the second half, the biggest decreases by far came in the PS and the RPS. The SPS held up impressively.

Put differently, in the first half of the year, SPS employment advances came to 22.81 percent of overall PS gains and 29.55 percent of the RPS increases. In the second half of the year, these figures jumped to 33.67 percent and 50.76 percent (i.e., more than half).

A similar story emerges from examining the full-year results for the last two years. Here are the numbers on net new hiring in 2021:

PS: 6.293 million

SPS: 0.589 million

RPS: 5.704 million

And for 2022:

PS: 4.203 million

SPS: 0.949 million

RPS: 3.254 million

In percentage terms, in 2021, the SPS accounted for 9.36 percent of all private sector jobs created, and 10.33 percent of the RPS total. In 2022, these figures climbed to 22.58 percent and 29.16 percent, respectively. So the subsidized private sector share of private sector employment increases more than doubled between 2021 and last year, and its share of the real private sector’s increases nearly tripled.

This SPS strong relative employment expansion indicates that the slump it experienced once the CCP Virus arrived in the United States in early 2020 is coming to an end. That Febuary – the last full data month before the pandemic began roiling the economy and the rest of American life – the SPS’ share of total private sector jobs stood at 18.98 percent and of RPS jobs at 23.84 percent.

Both figures slipped during the pandemic, (see, e.g., here) but now they’re back to 18.96 percent and 23.39 percent – resuming a much longer term pattern. That is, the economy may be returning to a state in which the SPS – and especially the healthcare services sector – is eating the job market once again.

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(What’s Left of) Our Economy: 2022’s U.S. Manufacturing Employment Winners and Losers

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automotive, durable goods, Employment, Federal Reserve, inflation, Jobs, manufacturing, nondurable goods, nonfarm jobs, private sector, recession, soft landing, {What's Left of) Our Economy

The release last Friday of the December official U.S. jobs report enables students of the economy to examine developments over the last full year, and that includes the biggest employment winners and losers in domestic manufacturing.  (Here‘s my analysis on the latest monthly manufacturing jobs data.) 

Below are the results for the broadest manufacturing categories tracked by the government, along with the durable and nondurable goods super-categories, both in absolute terms and in relative (percentage) terms. Because its fortunes have so strongly influenced those of all domestic industry, the data for the narower automotive sector will be presented as well.

(As known by RealityChek regulars, the numbers for other narrower sectors of special importance since the CCP Virus arrived stateside in force, like certain medical equipment and pharmaceuticals and semiconductors, are always one month behind. So year-on-year changes for full year 2022 won’t be available until next month.)

As with all U.S. government data, the figures below will be revised several times more. But unless the upgrades and downgrades are enormous, the year will have been marked by several important trends and comparisons with the 2021 data. In particular:

>manufacturing employment from December, 2021 through December, 2022 grew by exactly the same percent (3.02) as employment in the non-farm economy as a whole – the government’s definition of the entire economy;

>between December, 2020 and December, 2021, manufacturing job creation trailed hiring in the non-farm economy by 4.73 percent to 2.99 percent;

>between December, 2021 and December, 2022, head counts in the private sector as a whole expanded by 3.31 percent – also faster than manufacturing’s pace – but that result represented a smaller margin versus manufacturing than in 2021, when private sector payrolls expanded by 5.21 percent;

>in 2022, payrolls increased faster in durable goods (3.29 percent) than in nondurable goods (2.57 percent);

>in 2021, the durable goods edge was a smaller 3.11 percent versus 2.80 percent; 

>on a percentage basis, 2022 manufacturing job growth was broad-based. Of the 20 broad industry groupings tracked by the federal government, 15 generated additional hires and ten boosted their workforces by between two and four percent; and

>2021’s manufacturing employment increases were even broader based, however, as only the petroleum and coal products sector cut jobs.  But the spread among sectors was greater, as only eight fell into the two-four percent growth range.   

And now, the absolute yearly changes in manufacturing employment in 2022 and 2021, with the former listed in order from best performance to worst:

                                                                       2022                    2021

manufacturing total                                     379,000               365,000

durable goods                                              257,000               236,000

nondurable goods                                        122,000               129,000

transportation equipment                               90,800                 50,400

food manufacturing                                       59,100                  29,200

fabricated metal products                              43,900                  46,000

machinery                                                      41,000                  27,500

chemicals                                                       31,000                  26,300

computer & electronics products                   30,200                  14,600

miscellaneous nondurable goods                   18,400                  40,300

plastics & rubber products                             16,700                  20,100

miscellaneous durable goods                         15,600                  31,700

wood products                                                12,000                  16,900

non-metallic mineral products                       14,200                    3,300

primary metals                                                 9,900                  11,600

electrical equipment & appliances                   7,500                 17,500

paper & paper products                                    5,200                      800

printing & related support activities                   300                   7,000

apparel                                                               -300                   2,100

petroleum & coal products                             -1,600                  -4,400

textile mills                                                     -3,400                   3,900

textile product mills                                        -3,500                   4,000

furniture & related products                            -8,000                15,600

20-21 absolute changes

And here are those percentage changes, with the 2022 results again listed from best performance to worst:

                                                                           2022                   2021

manufacturing total                                            3.02                    2.99

durable goods                                                     3.29                    3.11

nondurable goods                                               2.57                    2.80

transportation equipment                                   5.43                     3.11

miscellaneous nondurable goods                       5.42                  13.46

machinery                                                          3.84                    2.64

food manufacturing                                           3.56 `                  1.79

chemicals                                                           3.53                    3.09

non-metallic mineral products                           3.48                    0.81

fabricated metal products                                   3.11                   3.37

wood products                                                    2.87                   4.21

computer & electronics products                       2.83                   1.39

primary metals                                                   2.78                   3.36

miscellaneous durable goods                             2.49                   5.33

plastics & rubber products                                 2.21                   2.82

electrical equipment & appliances                     1.86                   4.55

paper & paper products                                      1.48                   0.23

printing & related support activities                   0.08                   1.91

apparel                                                               -0.32                   2.28

petroleum & coal products                                -1.52                  -4.01

furniture & related products                              -2.09                   4.24

textile product mills                                           -3.32                   3.94

textile mills                                                        -3.39                   4.05

As for the automotive sector, which is placed within the broader transportation equipment category, it added 54,200 workers in 2022, a 5.50 percent advance. So among the above industries, on a percentage basis, it takes the job creation crown for industry during the past year.  Vehicle and parts makers enjoyed a strong 2021 employment-wise, too, enlarging their workforce by 4.05 percent, or 38,300.

A final noteworthy point: Manufacturing’s hiring performance doesn’t seem to have been strongly related to its production growth. In 2021, when industry’s payrolls expanded by 2.99 percent, its inflation adjusted output rose by 4.19 percent. But last year, when manufacturers upped their headcounts by 3.02 percent, their real production annual growth (through November – the lastest data available) slowed to 1.40 percent.

This year, the economy could well tip into recession, or perhaps at best achieve the “soft landing” sought by the Federal Reserve in its fight against inflation. In other words, U.S.-based manufacturers could well face a new test of the growth and hiring resilience they’ve shown so far since the pandemic’s arrival.            

(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.

Making News: Back on National Radio Tonight on Apple and China, & a New Podcast On-Line

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Apple, CBS Eye on the World with John Batchelor, CCP Virus, China, coronavirus, COVID 19, decoupling, Employment, friend-shoring, Jobs, Making News, Market Wrap with Moe Ansari, recession, subsidized private sector, supply chains, Zero Covid, Zero Covid protests

I’m pleased to announce that I’m scheduled to be back tonight to the nationally syndicated “CBS Eye on the World with John Batchelor.” Our subject – an update to Saturday’s report on Apple’s potentially game-changing decision to move production out of China at a faster pace. 

I don’t know yet when the pre-recorded segment will be broadcast but John’s show is on between 9 PM and midnight EST, the entire program is always compelling, and you can listen live at links like this. As always, moreover, I’ll post a link to the podcast as soon as one’s available.

Speaking of podcasts, the recording is now on-line of yesterday’s interview on the also-nationally syndicated “Market Wrap with Moe Ansari.” The segment focused on my post yesterday on the worsening quality of many of America’s newly created jobs, the political and economic impact of Chinese protests against the regime’s Zero Covid policy, and the latest signs of an impending U.S. recession.

To listen, click here, and scroll down a bit till you see my name on the left.  The segment begins at about the 21:30 mark.

And keep on checking in with RealityChek for news of upcoming media appearances and other developments.

(What’s Left of) Our Economy: Signs That a Big U.S. Jobs Problem is Back

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CCP Viirus coronavirus, COVID 19, Employment, health care services, Jobs, private sector, real private sector, subsidized private sector, {What's Left of) Our Economy

In yesterday’s post on the latest official U.S. jobs report (for November), I noted that monthly manufacturing employment creation and overall net new hiring have both slowed in recent months. But an even more serious problem could be lurking in the details of this release: The quality of the new jobs being created has been deteriorating lately, too.

Specifically, private sector job creation is weakening, and ever more of these jobs don’t deserve the label “private sector” at all. As RealityChek regulars know, that’s because this hiring has taken place in industries that together can be called the “subsidized private sector.” That is, they’re positions in parts of the economy, especially healthcare services, whose vibrancy depends heavily on government subsidies.

And although these jobs are clearly necessary for society to function satisfactorily, their mounting importance in the national employment picture means that job creation in the “real private sector,” whose fortunes are the key to keeping U.S. living standards sustainably high because of their superior productivity, is taking a back seat.

That November monthly employment report shows just how far these trends have proceeded. Last month (and these figures are still preliminary), were credited with boosting their payrolls by 221,000. That was the lowest such result since April, 2021’s 212,000, and much less than January’s 492,000 total.

Moreover, in January, only 6.71 percent of those new supposedly private sector jobs came in the subsidized private sector. But in November, that share had soared to 37.10 percent. That’s the highest such number since the beginning of 2021 – by which time the worst of the distortions wreaked by the CCPVirus on labor markets and the rest of the economy (including of course in health care) clearly had passed.

And the trend has noticeably accelerated this calendar year so far. For the first six months of 2022, the private sector as officially defined by the U.S. government added an average of just under 438,000 jobs each month. The subsidized private sector increased employment by a monthly average of just under 100,000. And the remaining real private sector boosted payrolls by a monthly average of just under 338,000.

Since then, however, officially defined private sector job creation has sunk to a monthly average of 281,000. The subsidized private sector average has slipped, too, but just to 89,600. And real private sector headcounts are way down to an average of 191,400 per month. The latter drop is one of 43.34 percent!

Put differently, during the first half of this year, subsidized private sector jobs represented 22.81 percent of all the rise in employment credited to the officially defined private sector. Since then, this share is up to 31.89 percent.

And for comparison’s sake, let’s point out that between February, 2019 and February, 2020 – the last full data year before the CCP Virus struck in force – the subsidized private sector’s share of total private sector job creation was just under 18 percent. That’s less than half the level of the latest monthly total. And although that year’s average monthly real increase private sector employment was a lower 138,830 per month, the economy wasn’t still in catch-up mode from a pandemic (the numbers of U.S. private sector workers is still just 1.16 percent above their immediate pre-Covid levels and the numbers of total workers are still 0.68 percent below), and the working age population was about 1.82 million smaller.

Again, none of this is a knock on the overall value of subsidized private sector jobs. Especially with the nation continuing to age, and significant numbers of serious CCP Virus infections and death still occuring, more and more healthcare workers will obviously be needed. But if not much else is happening hiring-wise, that’s all too likely to translate into less prosperity for the entire population going forward.

(What’s Left of) Our Economy: U.S. Manufacturing Job Growth is Down, but Don’t Count it Out

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aircraft, aircraft engines, aircraft parts, appliances, automotive, chemicals, electrical equipment, Employment, Federal Reserve, food manufacturing, inflation, Jobs, machinery, manufacturing, paper and paper products, pharmaceuticals, plastics and rubber products, primary metals, semiconductors, surgical equipment, transportation equipment, vaccines, {What's Left of) Our Economy

As shown by the new (for November) official U.S. employment report, domestic manufacturing’s job creation has been so strong since the CCP Virus arrived state-side in force that even one lagging month didn’t change its recent status as a national hiring leader.

That said, Friday’s report on what are called non-farm payrolls (NFP – the U.S. government’s definition of the American jobs universe) also revealed that, as with the entire economy, manufacturing job creation has downshifted in recent months. Whether it will stall out or worse going forward, however, remains a very open question.

Domestic industry upped payrolls by 14,000 sequentially in November – its weakest performance since shedding 28,000 positions in April, 2021. Revisions were positive, but just mildly, with October’s initially reported gain of 32,000 now pegged at 36,000, and September’s increase remaining at a slightly upwardly revised 23,000.

These results are less impressive than those from the first half of this year, when manufacturers boosted employment by a monthly average of nearly 40,000, and three months saw gains of more than 50,000. Yet since February, 2020 – the last full data month before the virus began spreading rapidly and roiling the economy – industry’s employees have increased by 1.17 percent. That’s better than the gain for the private sector overall (1.16 percent) and for the non-farm economy (0.68 percent).

Manufacturing’s share of all private sector jobs and all non-farm jobs did dip in November – from 9.87 percent of the former to 9.86 percent, and from 8.43 percent to 8.42 percent for the latter. But both shares are still higher than in February, 2020 – which were 9.83 percent and 8.38 percent, respectively.

In addition, the November manufacturing employment advance kept its head count at the highest level (12.934 million) since November, 2008’s 13.034 million.

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

>transportation equipment, a big diverse sector that added 6,100 workers. And revisions were nothing less than spectacular. October’s initially reported advance of 4,700 is now estimated as a surge of 13,200. September’s result is now judged as a 6,300 jump after having been revised down from an initially reported 8,400 increase to one of 4,700. And August’s initially reported 2,400 jump was jaw-droppingly upgraded to one of 10,500 and then to a 20,900 burst, which is the final figure for now. This rocket ride has pushed transportation equipment employment to 1.08 percent above the levels of immediately pre-pandemic-y February, 2020 versus the 0.14% calculable last month;

>chemicals, another big, diverse sector which raised employment by 4,700 – its best monthly result since May’s 5,100. Revisions, however, were mixed. October’s initially reported 1,600 increase was revised up to one of 2,200. September’s initially reported rise of 3,400 was downgraded to one of 2,700 but then revised back up to a 3,200 increase. But August’s initially reported gain of 3,500, which was revised up to 3,900, was then downgraded to a final total of 2,700. Still, chemicals payrolls have now climbed by 7.32 percent since the pandemic’s arrival in force, versus the 6.64 percent calculable last month;

>machinery, whose 3,900 net new employees were especially encouraging bothnew because this hiring was the strongest since April’s 5,800, and because this industry’s products are used so widely througout the rest of manufacturing and the entire economy. Even better, revisions were considerably positive. October’s initially reported improvement of 3,000 was upgraded to one of 3,600. September’s initially reported 1,700 decrease (which had been the worst since last November’s 7,000) was revised up to a decline of 300 and then estimated as the same. And after being revised down from 2,800 to 2,200, August’s increase was revised back up to the now final figure of 2,800. Whereas machinery employment was off by 0.90 percent from February, 2020 levels as of last month, it’s now within 0.55 percent; and

>food manufacturing, another big sector, and one that hired 3,400 net new workers. Revisions were mixed here, too. October’s initially reported increase of 1,000 was cut in half, to 500. But September’s initially reported 7,800 pop (the best such performance since February’s 11,100) went unrevised and then was downgraded to a still impressive 7,600. And although August’s initially reported 2,400-job loss was first revised up to one of 1,000, it was then downgraded to a decrease of 2,700, which is where it’s stayed. Food manufacturing’s workforce has now grown by 3.52 percent since the pandemic began hammering the economy, versus the 3.36 percent calculable last month.

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

>plastics and rubber products, whose 3,200 employment drop was its biggest since the 4,400 plunge in September, 2021 – and where revisions were negative, except for one that was in the “jaw-dropping” category, too. October’s initially reported increase of 3,000 was revised down to 700. September’s initially reported loss of 1,400 was upgraded to a gain of 600 before being revised way down to a decrease of 2,400. And after being revised down from an advance of 900 to one of 100, August’s job creation estimate soared to 4,400, where it remained Friday morning. But the post-February, 2020 increase in plastics and rubber products jobs fell from the 4.94 percent calculable last month to 3.76 percent;

>electrical equipment and appliances, whose 2,400 monthly employment decrease was the worst since May, 2020’s 6,100. Revisions, moreover, were significantly negative. October’s initially reported net new hiring of 300 is now judged to be a decline of 1,300. September’s initially reported rise of 3,000 has been downgraded twice – to one of 1,300 and then to 1,100. And August’s gains, which were first upgraded from 800 to 1,700, were then revised down to their final figure of 1,200. As a result of these setbacks, the payrolls of electrical equipment- and appliance-makers are now just 2.72 percent higher than in immediately pre-pandemic-y February, 2020, versus the 3.77 percent calculable last month;

.>paper and paper products, whose companies shed 2,000 jobs, their worst performance since the 2,800 drop in April, 2021. Revisions overall were negative. October’s initially reported increase of 900 was revised up to 1,300 (the best such performance since this past April’s 2,100). September’s initially reported rise of 100 was upgraded significantly to 1,200 before being downgraded to an advance of 700. And August’s initially reported loss of 700 was revised up to one of 500 but then downgraded to a 1,000 decline. Employment in this sector is now 1.10 percent lower than in February, 2020 versus the -0.52 percent calculable last month; and

>primary metals, where head counts weakened by 1,700 for the worst such result since the 9,200 nosedive in May, 2020 – as the Virus pandemic was just off its peak. Yet revisions were positive on net. October’s initially reported drop of 200 is now judged to have been a gain of 900. September initially reported decrease was upgraded even more – to an increase of 2,700 – before being revised back down to one of 2,300. And August’s initially reported improvement of 1,400 was downgraded to one of 600 before being upgraded to 900, where it remained today. Primary metals employment is now 3.95 percent lower than just before the pandemic’s arrival in force, versus the 3.68 percent calculable last month.

One industry followed closely by RealityChek throughout the CCP Virus period registered healthy solid employment gains in November. Job numbers in the automotive sector climbed by 1,900, and revisions were dramatically positive. October’s initially reported increase of 4,800 is now judged to have been 7,500. September’s initially reported growth of 8,300 was first downgraded to 7,400 but then revised up to 9,000. And August’s initially reported drop of 1,900 to a jump of 4,000 and then way up to a burst of 12,000 – its final figure for now and the best such result since March’s 18,400. This hiring wave left automotive sector head counts 4.17 percent higher than in immediately pre-CCP Virus February, 2020, versus the 3.54 percent calculable last month.

As known by RealityChek regulars, data for several other industries of special interest since the pandemic era began are always a month behind the figures for these broader categories, and these October results were generally good.

The shortage-plagued semiconductor industry added 2,300 jobs in October, possibly representing an early sign of the major Made in America incentives contained in the recently passed CHIPS and Science Act. The increase was the best since June, 2020’s 3,000, but revisions were only mixed. September’s initially reported advance of 800 is now judged to be a drop-off of 1,000, but August’s initially reported 1,200 increase was revised up to its now final figure of 1,500. Semiconductor industry employment is now 6.01 percent higher than in February, 2020, versus the 5.74 percent calculable last month.

The aerospace industry was hard hit by the pandemic because of all the national and worldwide travel restrictions put in place. In October, however, this sector’s jobs comeback generally continued strongly. Employment by aircraft manufacturers expanded by 3,900 that month, the best such result since June, 2021’s 4,400. September’s initially reported 1,300 increase was taken down a peg to 1,200, but August’s initially reported gain of 1,300 was revised up to 1,700 and left unrevised yesterday morning. As a result, aircraft manufacturing jobs are now 5.85 percent below their immediate pre-pandemic levels, versus the 7.41 percent calculable last month.

Aircraft engines- and engine parts-makers boosted payolls by 700 in October, their best such perfomance since July’s 800. Revisions were negative on balance, with September’s initially reported job decrease of 100 staying unrevised and August’s initially reported increase of 800 downwardly revised to a final figure of 400. Aircraft engines- and engine parts-makers employment consequently closed to within 8.07 percent of its pre-February, 2020 level, versus the 8.83 percent calculable last month.

Non-engine aircraft parts- and equipment-makers hired 100 net new workers in October, and revisions were mixed. September’s initially reported slip of 500 is now judged to have been one of 700 but August’s initially reported jump of 1,100 was revised up to a final figure of 1,300 – the best such result since January’s 1,400. The non-engine aircraft parts workforce is now 14.45 percent smaller than in since February, 2020 versus the 14.36 percent calculable last month.

The surgical appliances and supplies category contains the personal protective equipment, respirators, and other products central to the U.S. response to the CCP Virus, and kept on enlarging its workforce (by 400) in October. Revisions were mixed, as September’s initially reported job decrease of 200 was downgraded to one of 300, but August’s reported gains have been upgraded from.700 to 800 to 900 – the strongest such perfomance since March’s 1,100. Employers in this sector have now increased their workforce by 5.59 percent since just before the pandemic’s economic – and health – impact began to be fully felt, versus the 5.11 percent calculable last month.

The employment total for pharmaceuticals and medicines flatlined in October, and revisions were oveall negative. September’s initially reported employment expansion was revised up from 1,000 to 1,200 – the best since June’s 4,000. But August’s initially reported gain of 1,700 remained at a significantly downgraded 300. The head count in this sector is now 11.64 percent bigger than in immediately pre-pandemic-y February, 2020 versus the 11.58 percent calculable last month.

Finally, the medicines subsector containing vaccines added 600 net new workers in October in the strongest job increase since June’s 900. Revisions, though, were mixed, with September’s initially reported gain of 200 upped to 500 but August’s initially reported 900 increase now estimated at a decrease of 600 – the biggest drop since December, 2018’s 1,100. Vaccine-makers’ payrolls have now swelled by 26.29 percent since February, 2020, versus the 25.58 percent calculable last month.

The confusion surrounding the U.S. economy’s growth prospects for the foreseeable future inevitably create uncertainty about manufacturing’s outlook. As noted in this previous post, many forward-looking indicators look pretty worrisome, but at least through the end of this year, expansion seems to have  been continuing at a healthy rate.

Big questions about the Federal Reserve’s approach to inflation-fighting are also clouding the manufacturing forecast. But what may be especially revealing is that even during the first half of this year, when the economy tumbled into a recession, manufacturing, along with the rest of the private sector kept hiring, and kept reporting a strong desire to fill lots of empty positions. So until some convincing evidence appears that this striking, pandemic-era pattern will change if a slowdown does begin, I’ll be cautiously bullish about manufacturing job creation.

(What’s Left of) Our Economy: Two New Must-Read Reports on U.S. Trade Policy

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African Americans, Ana Swanson, China, Donald Trump, globalization, imports, Information Technology and Innovation Foundation, intellectual property, ITIF, Jobs, manufacturing, mercantilism, minorities, non-market economy status, protectionism, Section 337, The New York Times, Trade, trade law, U.S. International Trade Commission, USITC, wages, {What's Left of) Our Economy

Good things just came in twos on the U.S. trade policy front, in the form of two separate reports that spotlighted a major, vastly under-appreciated result of America’s approach to the international economy for many decades, and that proposed an excellent new idea for shielding U.S.-based workers and businesses from Chinese (and some other foreign) predatory trade practices.

The first study was released November 14 by the U.S. International Trade Commission (USITC) and alertly covered by Ana Swanson of The New York Times. The USITC researchers usefully reviewed the academic literature on trade policy’s impact on various U.S. population groups and found that overall, and came to two major conclusions. First, “in the face of trade shocks [like the soaring levels of imports from China that followed Washington’s decision in the 1990s to expand greatly bilateral economic ties], Black and other Nonwhite workers [fared] worse than their White counterparts.” Second, “import competition had a large and disproportionately negative effect on wages of minority workers.”

The reasons, the USITC stressed, were many and varied, and included discrimination in hiring and firing practices and the generally lower education levels of minority groups, which has tended to concentrate them in labor-intensive manufacturing sectors that have been vulnerable the longest to penny-wage competition from China and other developing countries. But one conclusion that shone through was the historic importance of manufacturing generally – including the kind of heavy manufacturing found in the Midwest, to minority prospects for economic progress.

And these conclusions will come as no surprise to RealityChek regulars, as the harm done to minority communities by a trade policy that I’ve long argued has been offshoring- and import-friendly has been the subject of two posts from several years back. (See here and here.) But as the X indicated, and the USITC report emphasized, too many gaps remain in the data currently available and too much of what can be accessed is too poorly structured to create a genuinely satisfactory picture. So how about USITC folks getting on the horn to their Census Bureau counterparts to get cracking?

One other point worth mentioning (which the USITC understandably didn’t include): The first recent President who tried at all to change the trade policies that apparently have hit U.S. minorities hardest was one Donald Trump – who’s still being widely pilloried as a white supremacist.

The second, more forward-looking report was released Monday by the Infomation Technology and Innovation Foundation (ITIF), a Washington, D.C.-based think tank, and recommended a creative way to use U.S. trade law to shut out of the American market products whose competitiveness has benefited from “unfair trade practices in non-market, non-rule-of-law economies such as China.”

The trade law provision ITIF would employ is called Section 337. The reason? Unlike other U.S. trade law measures, rather than authorize the imposition of tariffs on imports that are sold to Americans at below-market prices (dumping) or enjoy certain kinds of subsidies, or profit from intellectual property theft (the main alleged trade crimes addressed by American trade law), in certain circumstances Section 337 authorizes completely banning U.S. imports from foreign entities shown to have profited from such practices.

ITIF proposes to increase greatly the number of these circumstances, especially for cases not involving intellectual property, for transgessions by China and other economic rogues.

Perhaps most important, in cases involving such outlier countries, it would eliminate the (already weakened) requirement that a plaintiff domestic company or industry has been injured by predatory trade practices. (In the U.S. trade law system, plaintiffs not only need to demonstrate that an outlawed practice exists, but that it has seriously harmed them.) As ITIF argues,

“It should be irrelevant if the domestic company is harmed in the here and now. The point is that the unfair practices should not be rewarded, period. The other point is that all too often, especially in technologically complex industries, by the time harm is determined it is too late: The company has suffered irreversible decline in its competitive position. Adjudicating blame becomes a coroner’s inquest over dead U.S. companies.”

Two other crucial ways ITIF would lower barriers to winning Section 337 cases involving non-market economies: First, it would spur U.S. trade law to cover foreign governments that provide predatory support for their entities, as well as specific foreign entities themselves. This improvement matters a lot because in so many instances (for example, in every single instance of Chinese transgressions), American businesses and workers are facing an entire national system aimed at creating advantages having nothing to do with free market forces. As a result, U.S. plaintiffs typically wind up facing a defendant with ultimately much deeper pockets, and the high costs of American trade lawyering and the uncertain chances of success deter many from going this route to begin with.

Second, current U.S. trade law implicitly assumes that the damage inflicted by foreign trade predation is limited to a plaintiff company or industry. But given all the linkages among industries nowadays, that view is way too narrow, and can leave the entire economy exposed to much wider-ranging and long-term damage.

To remedy both problems, ITIF would also entitle Washington to take up their causes by permitting any U.S. government agency to file a trade case against a non-market economy.

I’ve got a few bones to pick with these ITIF recommendations. For example, damaging trade predation is by no means confined to China. Many economies that it would let off the hook, especially in East Asia, operate national systems of protection and predation, too. At the same time, as the report suggests, this approach could induce the kind of international cooperation that would increase by orders of magnitude the price China – clearly a culpit in a class by itself – would pay for what ITIF rightly calls its “economic aggression.”

Moreover, the new trade law regime wouldn’t encompass “multinational firms operating in China.” That’s an awfully big loophole, not only because it’s these companies (including U.S.-owned companies) send stateside lots of products that benefit from China’s mercantilism, but because taking advantage of these predatory practices has been a prime reason for moving their factories to China to begin with (as well as lying behind their support for admitting China into the World Trade Organization, and thereby providing these exports with a vital layer of international legal protection against effective, unilateral responses from Washington).

But in the name of making sure the perfect doesn’t prevent the good, I can support this policy, too (at least as a start). And because ITIF’s proposals would go far toward adjusting the decades-old U.S. trade law system to recent global economic reality, I hope both major paties in Washington get behind it ASAP.

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

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aircraft, aircraft engines, aircraft parts, automotive, computer and electronics products, consumers, Employment, fabricated metal products, Federal Reserve, housing, Jobs, machinery, manufacturing, non-farm payrolls, non-metallic mineral products, personal protective equipment, pharmaceuticals, PPE, private sector, recession, semiconductors, surgical equipment, textiles, transportation equipment, vaccines, wood products, {What's Left of) Our Economy

Maybe the next sets of official figures will show that U.S.-based manufacturing is finally succumbing to a series of formidable obstacles that have been placed in its way recently and not-so-recently: signs of a slowing U.S. economy, a Federal Reserve whose anti-inflation policies seem certain to undercut growth, major troubles in the big export markets so important to domestic industry, a super-strong dollar that harms its price-competitiveness all over the world, and continuing supply chain snags.

Yet as of the October jobs data released on Friday, domestic industry has continued to hire – which is almost always a sign of optimism from the employers with skin in the game.

Domestic industry added 32,000 workers on month in October, and revisions were positive. September’s initially reported gain of 22,000 was bumped up to 23,000. After being revised up from 22,000 to 29,000, the August numbers received another upgrade, to 36,000. And July’s final figure came in at an upwardly revised 37,000.

As a result, manufacturing payrolls are now 1.07 percent greater than in February, 2020, the last full data month before the CCP Virus pandemic began massively weakening and distorting the entire economy. As of last month’s jobs report, the pandemic-era gain had been 0.74 percent.

In fact, manufacturers’ hiring in October was so strong that it moved into the national post-February, 2020 job-creation lead. Employment in the overall private sector has expanded by just 1.03 percent since then, and in the entire American jobs universe – which includes public sector jobs and which the U.S. Labor Department calls “non-farm payrolls” (NFP) – is up only 0.34 percent.

As a result, manufacturing jobs now make up 9.87 percent of all U.S. private sector jobs, versus the immediate pre-pandemic figure of 9.83 percent, and 8.43 percent of all non-farm jobs, versus the 8.38 percent figure in February, 2020.

The October increases, moreover, kept manufacturing employment at its highest level (12.880 million) since November, 2008’s 13.034 million.

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

>the computer and electronics products industries, which boosted employment by 5,400 – its best such perfomance since the 6,300 workers added in June, 2020, early during the strong recovery from the first wave of the CCP Virus.

Revisions overall were mixed, though. September’s initially reported increase of 400 was downgraded to a loss of 500. August’s performance was first downgraded from a 4,500 increase to a 3,600 advance and then back up to one of 4,200. And July’s originally reported ise of 3,300 remained at 4,200 after being revised up to 3,900.

Consequently, computer and electronics employment is now up 1.41 percent since February, 2020, versus the 0.94 percent calculable as of last month. And although the increase seems small, it’s important to remember that these companies only cut headcounts modestly during the deep but short recession brought on by the virus’ first wave and lockdowns and voluntary behavior curbs it sparked;

>fabricated metal products, whose payrolls climbed by 5,200. Revisions were negative on balance. September’s initially reported increase of 6,300 – the best since May’s 6,600 – was revised down to 5,500. August’s improvement, already downgraded from 4,700 to 2,800, was upgraded to 3,100. And after an upgrade from 4,200 to 4,600, July’s increase is now judged to be 4,300.

Yet this big sector’s employment closed to within 1.04 percent of its February, 2020 level, versus the 1.36 percent gap that remained as of last month;

>transportation equipment, another very big group of industries, which expanded headcounts by 4,700 in October. Revisions? They were huge and generally positive. September’s initially reported increase of 8,400 was revised down to 4,700. But August’s figures, which had been upgraded all the way from a 2,400 gain to one of 10,500 saw a near-doubling 20,900 – the best such total since March’s 25,000 burst. July, also massively upgraded from a 2,200 increase to one of 12,600, remained at a further upgraded 13,600.

These revisions were enough to push transportation equipment employment higher than its February, 2020 level for the first time (though by just 0.14 percent). As of last month’s jobs report, these industries’ workforces were still 0.52 percent below; and

>non-metallic mineral products, a smallish sector that made 3,200 net new hires in October, and enjoyed generally positive revisions. September’sinitially reported 1,500 loss was upgraded to one of just 200. August’s original 2,800 gain was revised up a second time – from 3,400 to 4,100. But July’s initially reported 1,000 increase remained at a downwardly revised 700 improvement after being upgraded to 1,100.

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

>wood products, where employment slipped by 900, and revisions were generally negative. September’s initially reported gain of 2,200 – this sector’s best since May’s 3,600 – is now judged to be no gain. August’s initially reported loss of 100, first revised down to one of 600, it now estimated as a fall-off of 2,200 – the worst performance since the 30,200 nosedive in April, 2020, when the pandemic-driven downturn was at its worst. At least July’s initially reported rise of 200 has been upgraded to one of 700 and finally to 1,300.

These setbacks drove wood products jobs levels down from 6.76 percent higher than in immediately pre-pandemic-y February, 2020, to 5.60 percent greater since then;

>textile mills, whose jobs decline of 700 was its weakest such perfomance since the same decline in January. Revisions were slightly positive. September’s initially 500-jobs reduction is now estimated as a gain of 300. August’s initially reported loss of 400 jobs has now been gone unrevised twice, and July’s initially reported decrease of 600 has now gone unrevised three straight times.

Textile mill employment has now shrunk by 6.94 percent since February, 2020, versus the 7.03 percent retreat calculable last month; and .

>textile product mills, which saw an employment dip of 600. Revisions were slight and mixed. September’s initially reported payroll loss of 700 stayed unrevised. August’s initially reported employee decrease of 1,000 was first upgraded to one of 800 but then revised back down to 900 (the worst since an identical contraction in September, 2021). And July’s results, first upgraded to no change and then revised down to a decrease of 100 are now judged as a flat-line.

Still, whereas last month, textile product mill payrolls were down by 6.59 percent versus their numbers just before the pandemic struck, the gap has now widened to 7.22 percent.

Two industries followed closely by RealityChek throughout the CCP Virus period registered good employment gains in October.

The automotive sector saw jobs growth of 4,800 – and that was its worst performance since it shed 14,000 positions in February. As with the broader transportation equipment sector in which it’s placed, revisions were dramatic and generally positive. September’s initially reported increase of 8,300 was revised down to 7,400. But after having been upgraded from a drop of 1,900 to a rise of 4,000, August’s results were then revised all the way up to 12,100 – the best gain since March’s 18,400 surge. And July’s initially reported decrease of 2,200 has been upgraded to an increase first of 3,600 and then to its final figure of 8,400.

These gyrations brought automotive employment 3.54 percent above its February, 2020 levels, as opposed to the 2.33 percent calculable last month.

Machinery, a manufacturing and economy bellwether because its products are so widely used, generated good jobs news in October, too, with net hiring hitting 3,000 – the best such performance since April’s 5,800 increase. September’s initially reported decline of 1,700 (the worst since last November’s 7,000) was upgraded to one of just 300. August’s gains were upgraded to 2,800 after having been revised down from that level to 2,200. But July’s initially reported increase of 3,400 stayed at the 2,800 level estimated after being downwardly revised to 3,300.

Machinery employment has now closed to within 0.90 percent of its level in immediately pre-pandemic-y February, 2020, versus the 1.40 percent shortfall calculable last month.

As known by RealityChek regulars, data for several other industries of special interest since the CCP Virus arrived in force are always a month behind the figures for these broader categories. Unfortunately, their September results varied considerably.

The semiconductor industry, whose shortages have bedeviled numerous other manufacturing sectors (especially vehicle and parts makers), grew headcount by 800 – which seems OK until you realize that this increase was its smallest since March’s 400. Revisions were mixed, with August’s initially reported 1,200 increase upgraded to 1,500; and July’s initially reported 2,300 advance was downgraded to 2,200 (still the best such result since the payrolls jumped by 3,000 in June, 2020, during the first pandemic wave recovery) and then unchanged.

Employment in the sector is now up 5.74 percent since just before the virus’ arrival in force, versus the 5.15 percent calculable last month. But as with the broader computer and electronics products category in which it’s placed, it needs to be remembered that semiconductor makers cut almost no jobs during the height of the pandemic.

Aircraft manufacturers added 1,300 jobs on month in September, and revisions were positive. August’s initially reported 1,300 increase was upgraded to 1,700, and July’s initially reported 2,400 gain remained at an upwardly revised 2,500 – their best such results since June, 2021’s 4,400.

U.S. aircraft manufacturing has been harmed not only by the pandemic-era travel restrictions, but by Boeing’ssafety woes. But the recent increases have pulled employment by these companies to within 7.41 percent of their immediate pre-CCP Virus levels, versus the 8.11 percent calculable last month.

This progress, however, didn’t extend to the rest of the aerospace indsustry. Aircraft engines- and engine parts-makers reduced payrolls by 100 in September – the first decrease since July, 2021’s 200. But the August and July results of job growth of 800 each were left unrevised. (The initial July estimate was 900.)

Payrolls in this sector are now 8.83 percent lower than in February, 2020, versus the 8.62 percent calculable last month.

Non-engine aircraft parts- and equipment-makers lowered their headcounts by an even greater 500, and evisions were mixed. August’s initially reported net new hiring of 1,100 was upgraded to 1,300 (the best such result since January’s 1,400). But July’s initially reported loss of 600 jobs stayed at a downgraded one of 800 (the worst such performance since December’s 900).

Consequently, these companies’ payrolls have now shrunk by 14.36 percent since the pandemic first struck, versus the 14.10 percent calculable last month.

Employment also dipped in the surgical appliances and supplies category, which supplies so many of the Personal Protective Equipment (PPE) and other medical products used to fight the pandemic. But even though the industry cut 200 jobs in September (the first monthly loss since June’s 800), revisions were positive. August’s initially reported gain of 700 was revised up to one of 900 (the best since March’s 1,000), and July’s results, first pegged at a 700 gain, remained at an upwardly revised increase of 800.

Surgical appliances and supplies employment is now up by 5.11 percent since February, 2020, versus the 4.11 percent calculable last month.

Results were mixed as well in pharmaceuticals and medicines. Companies in that category boosted payrolls by 1,000 in September, but revisions were significantly negative. August’s initially reported job growth of 1,700 was downgraded to an increase of 300, and July’s results, first estimated as a gain of 500 positions, remained as a downwardly revised loss of 1,000 – the worst such result since an identical reduction in March, 2019 – before the pandemic.

Employment in this industry is still much higher than just before the pandemic’s arrival, but by 11.58 percent versus the 11.71 percent calculable last month.

And in the medicines subsector containing vaccines, those companies expanded headcounts by 200 in September, but revisions were mixed, too. August’s initially reported 900 jobs increase is now estimated as a loss of 600 (the biggest drop since the 1,100 positions eliminated in December, 2018), but July’s initially reported cut of 200 remained at an upwardly revised decrease of 100.

Up 26.90 percent from February, 2020 levels as of last month, payrolls in this subsector are now 25.58 percent higher.

The short-term employment outlook for U.S.-based manufacturing looks unusually uncertain even by the unusually high standards of an American economy that’s still greatly distorted by the pandemic and pandemic responses.  Reasons for optimism? They include the vast amount of money American households and businesses still have to spend, which should keep propping up domestic demand for American manufactures, the lag between the time when Federal Reserve inflation-fighting tightening began and the time when it starts meaningfully slowing economic activity, and the continued easing of supply chain snags. And the new legislation to revive U.S. semiconductor manufacturing should start generating more hiring in that sector and its suppliers before too long. 

At the same time, pessimists can point to developments like a widely forecast global slowdown bound to reduce foreign demand for U.S. domestic manufactures; manufacturing giant China’s insistence on keeping its Zero Covid policy, which has seriously disrupted both the economy of the People’s Republic and worldwide transportation networks;  and continued high inflation (including for the energy used by U.S.-based industry) that presumably will start giving American spenders pause at some point. (The interest rate-sensitive housing sector, a big user of manufactured products, is already reeling from Fed tightening.)    

So just like the Fed, RealityChek will stay data dependent as it monitors and especially prognosticates on domestic manufacturing’s future.         

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

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aircraft, aircraft engines, aircraft parts, automotive, chemicals, Employment, fabricated metals products, food products, Jobs, Labor Department, machinery, manufacturing, non-metallic mineral products, pharmaceuticals, plastics and rubber products, printing, semiconductors, surgical equipment, transportation equipment, vaccines, {What's Left of) Our Economy

Maybe the next sets of official figures will show that U.S.-based manufacturing is finally succumbing to a series of formidable obstacles that have been placed in its way recently and not-so-recently: signs of a slowing U.S. economy, a Federal Reserve whose anti-inflation policies seem certain to undercut growth, major troubles in the big export markets so important to domestic industry, a super-strong dollar that harms its price-competitiveness all over the world, and continuing supply chain snags.

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

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

These advances pushed manufacturing headcounts 0.74 percent above their levels in February, 2020 – the last data month before the CCP Virus pandemic began massively weakening and distorting the entire economy. As of last month’s jobs report, the pandemic-era gain had been 0.52 percent.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Making News: Podcast On-Line of New National Radio Interview on the Economy’s Confusing State

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election 2024, Employment, Federal Reserve, inflation, interest rates, Jobs, Making News, Market Wrap with Moe Ansari, monetary policy, quantitative tightening, recession, stagflation

I’m pleased to announce that the podcast is on-line of my latest appeaance on the nationally syndicated “Market Wrap with Moe Ansari.” Click here for an unusually detailed discussion of the outlook for the U.S. economy, why the signals being sent out from every source imaginable are still so wildly mixed, and on how politics could be driving many key decisions going forward.

And keep on checking in with RealityChek for news of upcoming media appearances and other developments.