(What’s Left of) Our Economy: U.S. Manufacturing Employment Hits a Downdraft

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aircraft, aircraft engine parts, aircraft engines, aircraft parts, appliances, automotive, chemicals, electrical components, electrical equipment, Employment, fabricated metal product, furniture, Jobs, machinery, manufacturing, NFP, non-farm payrolls, pharmaceuticals, primary metals, private sector, semiconductors, surgical equipment, transportation equipment, vaccines, {What's Left of) Our Economy

The manufacturing jobs results contained in last Friday’s official monthly U.S. employment report were downbeat both because 2,000 positions were shed between April and May, and because that makes two months of losses out of the last three. Domestic industry hasn’t experienced a stretch that bad since the period from late 2019 through the depth of the devastating but brief CCP Virus-induced economy-wide nosedive.

And to add insult to injury, revisions were negative. April’s initially reported gain of 11,000 was downgraded to one of 10,000, and March’s losses were revised down a second time – from 8,000 to 12,00 – the worst monthly read since the 42,000 collapse of April, 2021.

In fact, these collective setbacks pushed manufacturing still deeper into post-pandemic employment laggard status. Since February, 2020 – the last full data month before the CCP Virus pandemic began hammering and distorting the entire economy – manufacturing headcounts have risen by 1.56 percent – less than the 1.61 percent calculable from last month’s release.

During the same period, non-farm payrolls (NFP – the U.S. government’s definition of the national jobs universe) have risen by 2.45 percent – an improvement over the 2.10 percent calculable last month. And private sector headcounts are up by 3.04 percent – an improvement over the 2.78 percent calculable last month.

It’s no surprise then that manufacturing’s share of American employment keeps shrinking. As of the new jobs report, it stood at 8.32 percent of NFP – lower than the 8.35 percent calculable last month and 8.39 percent just before the CCP Virus arrived state-side in force. And it represented 9.73 percent of private sector employment – lower than the 9.76 percent calculable last month and the 9.87 percent calculable in February, 2020.

May’s biggest jobs winners among the broadest manufacturing sub-sectors tracked by Washington were highly concentrated in a handful of industries:

>in the big, diverse transportation equipment sector, 10,500 positions were added sequentially, and April’s initially reported 6,700 advance was upgraded to one of 10,600. In all, transportation equipment companies have now registered four straight months of strong job creation, and their employment levels are now 4.78 percent greater than in immediately pre-pandemic-y February, 2020 versus the 3.81 percent calculable last month;

>electrical equipment, appliance and components, where a sequential jobs boost of 2,100 snapped a two-month losing streak and represented these companies’ best such performance since March, 2022’s increase of 3,000. Consequently, job levels in this sector have now advanced by 2.04 percent during the CCP Virus era and its aftermath, versus the 0.98 percent improvement calculable last month.

>primary metal manufacturing, whose 2,000 employment increase marked a fourth straight month of gains. The monthly rise was also the biggest for these companies since they hired 1,200 net new workers last October. Primary metal manufacturers’ payrolls have now moved to within 2.50 percent of their February, 2020 level, versus the 2.98 shortfall calculable last month; and

>the large chemicals industry, which improved employment by 1,700, and pushed its pandemic-era-plus headcount growth to 7.52 percent, versus the 7.49 percent calculable last month.

May’s losers among these broad were broad-based, with the biggest being:

>furniture and related products, where a jobs retreat of 4,000 was its worst such performance since last November’s 4,200 reduction. Because of this drop, the sector’s workforce is now 5.29 percent smaller than in immediately pre-pandemic-y February, 2020, versus the 3.70 percent calculable last month;

>machinery, whose 2,400 jobs fall-off was its worst such performance since the 6,500 cratering in November, 2021. This decrease, plus some negative revisions,  depressed this diverse sector’s headcount down to 0.95 percent above its February, 2020 level, versus the 1.24 percent increase calculable last month.

This poor machinery performance matters because the widespread use of its products for expansion and modernization make it an important barometer of the health both of the rest of industry and of the entire economy; and

>fabricated metal product manufacturing, another large sector which cut 2,300 positions. Whereas these companies’ headcounts had pulled to within 0.94 percent of their level just before the CCP Virus’ arrival, they’re now back to 1.21 percent below.

In addition to machinery, RealityChek has tracked another industry consistently since the virus began destabilizing the U.S. economy: automotive, whose its fortunes have so often and so heavily influenced determined those of manufacturing as a whole during the pandemic period.

As suggested by the robust hiring performance of the transportation equipment sector, April was a return to this pattern, with vehicle and parts makers bolstering payrolls by 6,800. In addition, April’s initially reported hiring increase of 5,800 was revised all the way up to 9,000 – the best such performance since last December’s 9,500 burst.

This recent surge has pushed automotive employment 8.42 percent higher than in February, 2020, versus the 7.18 percent calculable last month.

RealityChek has also been monitoring several narrower sectors that have attracted special attention during the CCP Virus era, but where the data are always a month behind those of the above broader sectors, Their April employment performances were generally mixed.

Despite the U.S. government’s decision to provide major subsidies to foster more semiconductor manufacturing in America, the sector’s employment record in April continued a weak spell that began back in January. The April loss of 800 jobs in the semiconductors and related devices category represented the sector’s fourth straight monthly decline, and March’s initially reported 300 increase is now judged to have been a steep drop of 1,700.

These dismal results – no doubt due at least partly to the return of glut conditions in many types of microchips – dragged down these companies’ employment gains to 8.86 percent above immediate pre-pandemic levels, versus the 9.20 percent improvement calculable last month.

Aircraft manufacturers shed jobs for the second straight month in April, with the 1,300 fall the worst monthly performance since May, 2021’s slide of 4,100. Along with mixed revisions, the April tumble meant that the aircraft workforce is now 3.62 percent smaller than just before the CCP Virus’ arrival in force versus the 3.29 percent calculable last month.

Hiring by aircraft engines and engine parts-makers in April dipped for the first time in three months, as these industries cut headcount by 300. The decline however, was only the first since July, 2021 and it followed a March jump of 1,000 that stayed unrevised. So employment by these companies slipped further below its February, 2020 levels, but just to 6.66 percent versus the 6.33 percent calculable last month.

By contrast, in non-engine aircraft parts, the workforce expanded for the fifth straight month – the longest period of growth since the months between January and June, 2019. The gain of 400 was also noteworthy because it followed a March increase that was upgraded from 600 to one of 800. Jobs in non-engine aircraft parts maker climbed to within 14.10 percent of their immediate pre-pandemic total, versus the 14.62 percent shortfall calculable last month.

But jobs totals for surgical appliances- and supplies-makers dipped by 500 in April. And the initially reported March flatline result for companies that turned out many of the products used to fight the virus is now judged to have been a shrinkage of 200. So where as of last month, these workforces were pegged at 1.23 percent larger than their February, 2020 levels, this growth has now been pared back to 0.57 percent.

The pharmaceuticals and medicines sector fared much better hiring-wise, with its 1,500 net new jobs its best such performance since January’s 1,700. This improvement, plus positive revisions, brought employment in this sector 15.09 percent higher during the CCP Virus era and its continuing aftermath versus the 14.54 percent increase calculable last month.

And the pharmaceutical sub-sector that contains vaccines added 800 jobs for its best employment month since last June and its increase of 900. The workforce for these vital health security companies is now 20.61 percent larger than in February, 2020, just before the CCP Virus’ arrival in force, versus the 19.80 percent calculable last month.

To be sure, domestic manufacturing data has a habit of producing pleasant surprises. (See, e.g., the latest production figures.) But with the overall economy continuing to lose momentum, and the foreign markets that normally buy so many domestically manufactured products performing no better, any near-term improvement in U.S. manufacturing employment will be just that – a pleasant surprise.    

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(What’s Left of) Our Economy: The Latest Upside Surprise for U.S. Manufacturing

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aircraft, aircraft parts, apparel, automotive, computer and electronics products, Federal Reserve, furniture, inflation, inflation-adjusted output, machinery, manufacturing, medical equipment, miscellaneous durable goods, pharmaceuticals, plastics and rubber products, primary metals, recession, {What's Left of) Our Economy

Sorry for the tardiness of this post on the latest official (April) figures for U.S. manufacturing output. Sometimes life gets in the way. But I hope you agree that they’re still worth reviewing because even without a stupendous performance by the automotive sector, they’d have still been solid.  And the more so with domestic-based industry and the entire economy either supposedly headed for recession or already in one.

These results don’t change the recent big-picture description of U.S.-based manufacturing production essentially flat-lining. But it hasn’t experienced a significant drop-off, either.

In fact, the April sequential growth of 1.02 percent in inflation-adjusted terms (what’s measured by these data tracked by the Federal Reserve and what will be used in this post unless otherwise specified) was the strongest since January’s 1.59 percent. And revisions were slightly positive.

And leaving aside the vehicle and parts sectors, April’s increase would have been a highly respectable 0.38 percent.

The April report shows that American manufacturers have now boosted their output by 1.20 percent since February, 2020, just before the state-side arrival in force of the CCP Virus pandemic As of last month, this figure was 0.93 percent.

The biggest April production winners among the broadest industry-specific manufacturing categories monitored by the Fed were:

>automotive, whose blazing 9.30 percent expansion not only was its best since October, 2021’s 10.44 percent but enabled the industry to achieve a new all-time production record. It topped December, 2018’s previous historic high by 1.89 percent.

Automotive output figures, though, can be volatile. Indeed, the strong April advance followed a downwardly revised March tumble of 1.93 percent that was the sector’s worst monthly performance since February, 2022’s 3.37 percent dive. So it’s still far from clear whether April represents a blip or the start of a lengthy upswing.

What is clear that, pending revisions, the April monthly jump pushed automotive production to 1.57 percent above its immediate pre-pandemic level, versus the 0.97 percent calculable last month;

>computer and electronics products, whose 2.15 percent April gain broke a weak spell of four months and stands as the sector’s best performance since its 2.62 percent advance in May, 2021. These industries have now grown by 1.57 percent since immediately pre-pandemic-y February, 2020, versus the 0.97 percent increase calculable last month. This rate seems modest, but computer and electronics products fell off only modestly during the deep CCP Virus-induced economy-wide downturn;

>plastics and rubber products, where production expanded by 1.16 percent in April for the sector’s second straight improvement after a long spell of weakness. In fact, the April results for plastics and rubber products makers was their strongest since February, 2022’s 2.67 percent. But due to some major downward revisions, these industries’ output sank from 0.37 percent below pre-pandemic levels to 2.01 percent below.;

>primary metals, which boosted production by 0.90 percent. But these industries have still shrunk by 2.71 percent during the pandemic era and it aftermath, versus the 2.90 percent calculable last month.

The biggest losers among these broad sectors were:

>miscellaneous durable goods, where output in April tumbled by 1.32 percent in the worst performance by this diverse group of industries since last December’s 1.79 decrease. Miscellaneous durable goods producers have still increased their production by 9.59 percent since February, 2020, but last month, growth during this period was 11.30 percent;

>apparel and leather goods, where production was cut by 0.80 percent, and post-February, 2020 growth was nearly halved – from the 9.12 percent calculable last month to 5.25 percent. Nonetheless, despite this progress, because of decades of penny-wage foreign competition, these sectors remained mere shadows of themselves:

>machinery, whose output decreased by 0.50 percent and extended a three-month losing streak. These results are discouraging because this diverse grouping is a bellwether for the rest of manufacturing and the economy overall, since its products are so widely used for expansion and modernization. Machinery’s poor recent performance has dragged its CCP Virus-era-and-beyond growth from the 5.85 percent calculable last month to 3.54 percent; and

>furniture and related products, whose -0.43 percent April output slip was its sixth retreat in the last seven months. These industries are now 12.43 percent smaller than in just before the CCP Virus’ arrival, versus the 11.49 percent calculable last month.

Manufacturing sectors of special importance since the pandemic began depressing and distorting the economy followed a solid March with a comparably good April.

The global semiconductor sector shortage that began during the virus period has now eased dramatically for most types of chips, and in that vein, it’s no surprise that U.S.-based producers increased output in April for the third straight month. The 2.08 percent improvement pushed the sector’s production 10.54 percent higher since February, 2020, versus the 8.05 percent calculable last month.

April production of pharmaceuticals and medicines – including vaccines – was strong, too, with the 1.06 percent rise representing the best performance since last December’s 1.08 percent. This sector is now 14.57 percent larger than in immediately pre-pandemic-y February, 2020, versus the 13.38 percent calculable last month.

Aircraft and aircraft parts companies boosted their production only fractionally in April, but this marginal gain broke a string of four straight decreases. Even so, a substantial downward March revision helped reduce these firms’ output growth since the pandemic’s arrival state side in force to 7.07 percent, versus the 7.87 percent calculable last month.

The only April loser among this group was the medical equipment and supplies industry. It’s 1.03 percent production drop was the worst since last December’s 1.57 percent, and dragged its virus-era-and-beyond growth from the 14.52 percent calculable last month to 13.02 percent.

With a U.S. recession still a prediction rather than a fact, the economy continuing to show at least decent momentum, and a growing likelihood that the Federal Reserve will pause its campaign of combating inflation with growth-slowing interest rate hikes, it’s difficult to be gloomy about domestic manufacturing’s near-term future. And if the nation’s politicians succumb to their usual election-year temptation to throw more money at businesses and consumers, then industry’s medium-term prospects look pretty good, too.

Of course, if that’s so, it means that inflation will stay high as well. And how long both developments will remain tolerable for businesses, consumers and all the consumers who vote, and the Fed with its inflation-fighting responsibilities, is anyone’s guess.

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

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aircraft, aircraft engine parts, aircraft engines, aircraft parts, appliances, automotive, CCP Virus, computer and electronics products, coronavirus, COVID 19, electrical equipment, electronic components, Employment, fabricated metal products, Jobs, Labor Department, machinery, manufacturing, non-farm payrolls, non-metallic mineral products, paper, phamaceuticals, semiconductors, transportation equipment, vaccines, {What's Left of) Our Economy

America’s domestic manufacturing delivered no fewer than two upside employment surprises in April, according to today’s latest U.S. Labor Department report. Despite persistent reports of U.S.-based industry’s mounting woes (here‘s one of the most recent), the sector added 11,000 jobs on net last month – not world-beating, but its best such performance since January’s identical number.

And revisions showed that the two-month employment losing streak manufacturing had experienced as of last month’s data…wasn’t. Specifically, February’s originally reported 4,000 monthly manufacturing headcount drop has now been revised to a gain – most recently of 3,000.

At the same time, the revisions were overall slightly negative, because of the downgrade of March’s results from a drop of 1,000 to one of 8,000. If that figure holds, it will represent the sector’s first setback since the 32,000 sequential nosedive in April, 2021 that stemmed largely from the automotive sector’s problems securing semiconductor supplies.

On the plus side, however, these manufacturing revisions weren’t nearly as bad as those for the previous two months revealed in the new report on “non-farm payrolls” (the Labor Department’s definition of the American jobs universe).

In fact, although the new data left domestic manufacturing as a national job-creation laggard, this status essentially stopped deteriorating in April.

Since February, 2020 – the last full data month before the CCP Virus pandemic began hammering and distorting the entire economy – manufacturing headcounts have risen by 1.61 percent. That’s a slight improvement over the 1.55 percent calculable from last month’s NFP release.

Total employment is now up 2.17 percent during this period, versus the 2,10 percent calculable last month. And the workforce for the private sector as a whole has grown by 2.78 percent, versus the 2.71 percent calculable last month.

Consequently, as of the the April results, manufacturing represented 8.35 percent of all NFP jobs – the same share calculable from the previous employment report but higher than the 8.39 percent it hit just before the pandemic’s arrival in force state-side. And it accounted for 9.76 percent of all private sector jobs – also the same as last month’s share but lower than the 9.87 percent from February, 2020. (The difference stems from still-depressed levels of public sector employment, which is part of that NFP category.)

April’s biggest jobs winners among the broadest manufacturing sub-sectors tracked by Washington were highly concentrated in a handful of industries:

>the big, diverse transportation equipment sector, which enjoyed its third straight month of strong job creation by boosting employment on month in April by 6,700. Payrolls in these companies are now up by 3.81 percent since immediately pre-pandemic-y February, 2020, versus the 3.33 percent calculable last month;

>fabricated metal products, another big sector, where the workforce expanded by 6,300 – its strongest such showing since February, 2022’s 6,900. Moreover, revisions were positive, including a February result initially reported as a drop of 1,100, then downgraded to one of 1,200, but now recorded as a gain of 300. This progress pulled fabicated metals payrolls from the 1.45 percent below their February, 2020 levels calculable last month to witin 0.94 percent; and

>computer and electronic products, where an increase of 3,200 workers was its best monthly performance since last October’s 3,300. Employment in these industries has now advanced by 1.95 percent during the (ongoing) CCP Virus period, versus the 1.70 percent calculable as of last month.

April’s biggest losers among these broad groupings were:

>paper manufacturing, which lost 2,700 employees in its worst such performance since the 4,600 fall-off two Aprils ago. Now down 2.62 percent versus 1.29 calculable last month.

>electrical equipment, appliance, and components, where cuts of 2,600 jobs were made for the second straight month. This loss dragged this grouping’s post-February, 2020 head count gains down to 0.98 percent from the 1.71 percent calculable last month; and

>non-metallic mineral products, where a sequential employment decline of 2,300 represented both the third monthly drop in a row and the biggest since March, 2022’s 5,000. Payrolls in this sector are now 2.19 percent above their immediate pre-pandemic level, versus the 2.81 percent improvement calculable last month.

RealityChek has tracked two industries consistently since the virus began destabilizing the U.S. economy: machinery, because its products are used so widely throughout manufacturing and non-manufacturing sectors that it’s a good barometer of industry’s health; and automotive, because its fortunes have so often and so heavily influenced determined those of manufacturing as a whole during the pandemic period.

As a result, the former’s weak April job growth of 200 wasn’t especially good news. Nor was the sharp downward revision of March’s initially reported 3,800 increase (which had been the biggest since November’s 5,800) to just 1,900. Due to these results, machinery’s employment is up just 1.24 percent since the last pre-pandemic full data month of February, 2020 versus the 1.55 percent calculable last month.

By contrast, vehicle and parts makers added 5,800 new workers in April, extended a string of hiring gains to four months, and turned in their best performance since December’s 9,500 binge. Revisions, moreover, were strongly positive, including a February upgrade from an initially reported increase of 200 to one of 1,300 to one of 3,800. These improvements brought automotive’s post-February, 2020 employment increase up to 7.18 percent from the 6.45 percent calculable last month.

RealityChek has also been monitoring several narrower sectors that have attracted special attention during the CCP Virus era, but where the data are always a month behind those of the above broader sectors, Their aemployment performances (in March) were overall moderately positive.

Although U.S.-based semiconductor companies and their foreign counterparts are slated to receive major government funding to foster domestic production, the sector is now experiencing a global glut for most customer industries. Perhaps that’s why February’s unrevised employment loss of 600 for the semiconductors and related devices category was followed by a gain of only 300 in March – and why this increase was only the first monthly advance since December.

Payrolls in this sector are now up 9.28 percent since just before the pandemic’s arrival in force, versus the 10.20 percent calculable last month.

In aircaft manufacturing, which was damaged by pandemic-era travel curbs and Boeing’s production woes, a strong employment comeback came to a halt in March. Indeed, the month’s drop of 700 was the first such retreat since the 300 jobs shed in January, 2022. Further, February’s initially reported 1,300 hiring burst has been revised down to one of 1,100.

Even so, the aircraft workforce is still just 3.29 percent smaller than in February, 2020, versus the 2.91 percent calculable last month.

Hiring by aircraft engines and engine parts-makers, however, jumped by 1,000 in March – their best such performance since they added 4,800 employees in May, 2020, as they tried to rebound from the devastating first wave of the CCP Virus pandemic. February’s initially reported gain of 900 was downgraded to one of 600, but these companies’ payrolls have now recovered to 6.33 percent below their immediate pre-pandemic total, versus the 7.10 percent shortfall calculable last month.

Non-engine aircraft parts jobs climbed by 600 in March, their fourth straight advance. A stretch that long hasn’t been achieved since these businesses boosted their workforces for six consecutive months between January and June, 2019. Due to these increases, non-engine aircraft jobs are now 14.62 percent fewer than in February, 2020, versus the 15.44 percent gap calculable last month.

As for surgical appliances- and supplies-makers, who turned out many of the products used to fight the virus, their employment remained flat in March. Consequently, their workforces remained 1.23 percent larger than just before the pandemic.

The 400-job gain by the pharmaceuticals and medicines sector pushed their CCP Vius employment growth up to 14.54 percent, versus the 14.41 percent calculable last month.

The pharmaceutical sub-sector that contains vaccines lost 300 jobs in March, but its initially reported February rise of 300 has been revised up to one of 400. Its employee count is now 19.80 percent higher than in immediately pre-pandemic-y February, 2020, versus the 19.90 percent calculable last month.

In the middle of last month, I concluded that the latest official figures on manufacturing output showed the sector to be “spinning its wheels.” These new manufacturing employment numbers seem to be sending the same message – and as with the production data, indicate that industry’s future, like that of the rest of the economy, depending on the fate of domestic demand – and in turn on whether the Federal Reserve will chicken out from its growth-slowing inflation-fighting strategy, and whether and the extent to which politicians will succumb to their traditional temptation to keep voters’ economically happy with robust spending programs, major tax cuts, or some combination of the two.

(What’s Left of) Our Economy: Energy Drove the U.S. Trade Deficit Drop in a March Full of Records

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Advanced Technology Products, China, energy, European Union, exports, Germany, goods trade, imports, Made in Washington trade flows, manufacturing, Mexico, Netherlands, non-oil goods trade, oil, petroleum products, services trade, Trade, trade deficit, {What's Left of) Our Economy

The monthly improvement in the U.S. deficit in March revealed in today’s official U.S. trade report was first and foremost an energy story – not that other noteworthy developments couldn’t be found, specifically records in manufacturing and in American trade with several leading partner countries and regions, and big changes in goods trade with China.

The combined goods and services trade gap narrowed sequentially on month by 9.08 percent, from an upwardly revised $70.64 billion to $64.23 billion. The March total was the lowest since November’s $60.65 billion.

Moreover, the deficit shrank in the best possible way. Total exports rose by 2.12 percent, from a downwardly revised $250.84 billion to $256.15 billion, while total imports dipped (and for the second straight month) by 0.34 percent, from an upgraded $321.48 billion to $320.38 billion. And this trade deficit progress took place when the economy was still growing (albeit at a significantly slowing rate).

And of the $5.31 billion sequential increase in total exports, $4.68 billion (88.14 percent) came in the petroleum products category. In fact, these foreign sales grew at the fastest monthly rate (21.26 percent) since March, 2022 (28.22 percent).

Largely as a result, the goods deficit tumbled in March by 6.92 percent, from $93.03 billion to $86.59 billion – their lowest level since last November, too. ($83.02 billion).

Indeed, petroleum products exports accounted for 89.66 percent of the $5.22 billion expansion of goods exports. On a relative basis, these foreign sales climbed by 3.09 percent, from a downwardly revised $169.09 billion to $174.31 billion.

Goods imports, meanwhile, decreased for the second straight month as well, by 0.47 percent, from a downwardly revised $262.12 billion to $260.90 billion.

The longstanding surplus in services trade slipped in March by 0.11 percent, from a downwardly revised $22.39 billion to $22.37 billion – the lowest level since October’s fractionally higher figure.

Services exports improved by 0.11 percent, from a downwardly revised $81.75 billion to a second straight record of $81.84 billion. The new total topped the old $81.32 billion mark from last December by 0.65 percent.

Services imports, meanwhile, advanced by 0.20 percent, from a downwardly revised $59.36 billion to $59.48 billion – the second highest total ever behind last September’s $59.55 billion.

The huge and longstanding U.S. goods trade deficit with China became a good deal less huge in March, sinking for the second straight month – and by 12.59 percent, fom $19.00 billion to $16.61 billion. Further, that total was the lowest since the $15.76 billion hit in February, 2020 – when China’s economy was still grappling with the devastating first wave of the CCP Virus.

U.S. goods exports to the People’s Republic shot up by 22.06 percent sequentially in March – from $11.62 billion to $14.18 billion. The new total is the highest since last November’s $15.58 billion, and the rate of increase the fastest since last October’s 31.33 percent.

For some perspective, though, this big March increase followed a sizable 11.26 percent decrease in February.

U.S. goods imports from China inched up for the second straight month, but by just 0.55 percent, from $30.62 billion to $30.79 billion. And those two totals are the lowest since early in China’s recovery from that first 2020 virus wave.

Most strikingly, on a year-to-date basis, the U.S. goods deficit with China has cratered by a whopping 39.85 percent, from $101.04 billion to $60.77 billion.

These results, moreover, clash loudly with those of the U.S. worldwide non-oil goods trade – which as known by RealityChek regulars is a close proxy for U.S.-China goods trade.

The U.S. non-oil goods deficit (which can also be considered the “Made in Washington” deficit because it tracks trade flows most strongly influenced by U.S. trade deals and other policy decisions) worsened by 0.19 percent between February and March – from $92.19 billion to $92.36 billion. So China goods trade performed better sequentially on this basis.

U.S. goods exports to China were up in March much faster than the 0.25 percent gain in non-oil goods exports (from $145.80 billion to $146.16 billion).

As for non-oil goods imports, they increased by just 0.23 percent in March (from $237.98 billion to $238.52 billion) – not dramatically different from the China goods performance.

But the year-to-date contrast is enormous. Whereas the U.S. goods deficit with China nosedived by nearly 40 percent, for non-oil goods trade, it fell by less than half that – 17.80 percent, from $336.25 billion to $276.40 billion.

That makes it hard to avoid concluding that the Trump (now Trump-Biden) tariffs keep punishing China (along with Beijing’s own-goals ranging from last year’s wildly over-the-top Zero Covid policies to increasing harassment of U.S.- and other foreign-owned companies) but not simply by diverting imports and trade to other countries and regions. Domestic American producers must be getting some of that old China business as well.

The manufacturing trade deficit, however, worsened by 9.08 percent in March, from $100.05 billion to $109.64 billion. True, this increase followed a 14.36 percent drop in February, but it can’t be good news given the sector’s recent weakness.

Interestingly, this deterioration reflected major changes in both monthly exports and imports. The former soared by 18.91 percent, from $98.06 billion to a new record $116.60 billion (which topped the previous mark of $114.78 billion set last June by 1.58 percent).

Industry’s foreign purchases jumped by 14.20 percent, from $198.10 billion to $226.24 billion.

Big monthly changes and a record were also recorded in Advanced Technology Products (ATP) trade in March. The ATP deficit dropped from $16.23 billion to $14.31 billion. The 11.82 percent narrowing brought the gap to its smallest since February, 2022’s $13.42 billion.

ATP exports shot up from $29.12 billion to a new all-time high $38.33 billion. And the 31.65 percent increase was the most dramatic since March, 2002’s 31.94 percent.

Imports surged, too – by 16.09 percent, from $45.35 billion to $52.65 billion. And that upswing was he fastest since the 33.64 percent burst of last March.

On the regional and bilateral fronts, many of the most dramatic developments came in U.S. goods trade with Europe.

America racked up its biggest exports total ever to the European Union ($34.96 billion – 12.04 percent greater than the $31.20 billion level hit last March) and bought its second greatest total of imports ($50.82 billion, a number trailing only last October’s $53.07 billion).

The volatile U.S. surplus with the Netherlands skyrocketed by 116.40 percent on month, from $1.84 billion to $3.98 billion, keyed by record exports of $7.76 billion. That smashed the previous mark of $6.96 billion by 11.50 percent.

U.S. goods exports to Germany achieved an all-time high, too, with the $7.50 billion figure exceeding the old record of $6.62 billion, set last March, by 13.20 percent.

The U.S. goods deficit with Mexico reached its highest ever, too, in March, with the $13.55 billion total coming in 8.25 percent higher than the old record of $12.57 billion from August, 2020. American goods sales to Mexico totaled $29.27 billion – their second best performance ever after last August’s $29.98 billion. But imports reached a new record of $42.82 billion – 5.87 percent greater than last March’s $40.45 billion mark.

(What’s Left of) Our Economy: New Official Data Show U.S. Manufacturing Spinning its Wheels

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aerospace, aircraft, aircraft parts, apparel, appliances, automotive, CCP Virus, coronavirus, COVID 19, electrical components, electrical equipment, Federal Reserve, industrial production, inflation-adjusted output, machinery, manufacturing, medical devices, medicines, miscellaneous transportation equipment, non-metallic mineral products, paper, petroleum and coal products, pharmaceuticals, plastics and rubber products, real growth, recession, semiconductors, stimulus, wood products, {What's Left of) Our Economy

Including some long-term “benchmark” revisions issued late last month, today’s Federal Reserve figures show that U.S. manufacturing output after inflation fell sequentially in March for the first time in three months.

The drop followed upgraded results for January and February, but even with those latest longer term revisions, the more important takeaway is that as of March now, price-adjusted manufacturing production (the measure used by the Fed, and the one that will be used in this release unless specified otherwise) was virtually unchanged over the past year.

And since February, 2020, just before the state-side arrival in force of the CCP Virus pandemic, industry has now grown by just 0.93 percent. Last month’s pre-benchmark Fed report pegged this increase at 1.65 percent.

For some longer term perspective, the new Fed statistics tell us that since peaking way back in December, 2007, American manufacturing production is down 5.98 percent. As of the last pre-benchmark release, this shrinkage was 5.30 percent. So domestic industry’s decade-and-half-plus slump has been slightly worse than previously estimated.

Back to the most recent numbers, only eight of the twenty biggest individual industry sectors tracked by the Fed expanded production on month in March. The biggest winners were:

>the very small apparel and leather goods industries, where production jumped sequentially in March by 1.96 percent. Although hammered and greatly diminished by decades of penny-wage foreign competition, output by these companies is now up 9.12 percent since just before America’s pandemic era began, versus the 8.02 percent calculable last month;

>petroleum and coal products, whose output expanded in March for a fourth straight month, and whose by 1.29 percent advance was the strongest since the 2.34 percent surge last September. Petroleum and coal products production is now 3.88 percent off its immediate pre-pandemic level, versus being 1.41 percent higher as of last month’s Fed release;

>paper manufacturing, which grew by 0.78 percent in March for its best monthly gain since November’s 1.64 percent increase. Since February, 2020, this sector has contracted by 6.33 percent – a big decrease but much better than the 13.69 percent plunge calculable last month;

>aerospace and miscellaneous transportation, where the March increase of 0.73 percent was the fist gain since last August. Production is now 6.84 percent higher than immediately prior to the pandemic’s state-side arrival in force, much lower than the 23.06 percent gain calculable last month; and

>plastics and rubber products, where production also improved by 0.73 percent in the sector’s best advance since February, 2022’s 2.67 percent burst. These sectors’ output moved to within 0.37 percent of it immediate pre-pandemic level, much closer than the 5.62 percent shortfall calculable last month.

The biggest losers of these big sectors were:

>wood products, which saw output plunge by 2.90 percent in March. And that wasn’t even its worst recent setback – that dubious honor goes to December’s 3.18 percent drop. These dismal results dragge wood products production down to 5.46 percent below its February, 2020 level, versus the 2.49 percent calculable last month;

>non-metallic mineral product, where production decreased for the first time in four months. But the 2.56 percent sequential retreat was the sector’s worst since the 4.01 percent crater in winter-affected 2021. Thanks to the rest of the benchmark revision, though, output of non-metallic mineral products is now actually up by 6.95 percent post-CCP Virus, versus the 2.67 percent calculable last month;

>electrical equipment, appliance, and component, a 1.71 percent production loser in its weakest monthly performance since November’s 2.83 percent tumble. Output in this diverse sector slipped to being up just 0.56 percent since immediately pre-pandemic-y February, 2020 versus the 4.32 gain calculable last month; and

>automotive, whose fortunes have been central to those of domestic manufacturing overall during these last challenging years. Its 1.48 percent March production drop was the greatest since last November as well (2.09 percent). This setbacks plus other benchmark revisions have pushed output of vehicles and parts down to 5.14 percent below February, 2020 levels. As of last month’s Fed release, they were 0.12 higher.

Output drooped in another manufacturing sector of unusual importance – machinery. Its products are used widely throughout the rest of industry and the economy that its production performance suggests whether the American corporate sector overall has decided to expand and modernize or whether its views the future more pessimistically.

Machinery’s March output dip of 0.68 percent, therefore, could be a negative indicator. At the same time, the decline was the first in three months – so maybe it’s a hiccup. Machinery production has now grown by 5.85 percet since the CCP Virus’ arrival in force state-side, slightly better than the 5.54 percent calculable last month.

Although President Biden has just declared the pandemic to be officially over, manufacturing sectors of special importance during this period fared well in March.

The global semiconductor industry that was plagued by shortages for so long now seems to be in full glut mode – except for the auto sector, whose chip supply reportedly is still spotty. Domestic output climbed 0.55 percent in March for its second straight monthly improvement. Slated to receive tens of billions of dollars worth of production subsidies from Washington going forward, semiconductor manufacturers have now raised their virus-era production by 8.05 percent since February, 2020 – a startling turnabout from the 7.83 percent decrease calculable last month.

Despite the pandemic’s steady fade over the last year, companies in medical equipment and supplies kept increasing production, and March’s advance of 0.43 percent was the third straight month of increases. Since the start of the pandemic era, their output has risen by 14.59 percent, versus the 10.52 percent calculable last month.

Production in pharmaceuticals and medicines – including vaccines – gained another 0.38 percent in March. Nonetheless, due to those benchmark revisions, its output is now estimated to be 13.38 percent greater than just before the pandemic’s arrival, down considerably from the 20.42 percent increase calculable last month.

Aircraft and aircraft parts companies kept benefiting from the post-pandemic rebound in travel, and turned out 0.35 percent more products in March than in February. But again, revisions resulted in a startling downgrade in post-February output figures – from the 30.19 percent increase calculable last month to just 7.87 percent.

What to expect going forward for manufacturing output?  As discussed for the entire economy in my latest post on consumer inflation, gloomy for the short-term (as signs of an impending slowdown and even recession mount) but brighter longer term (mainly because politicians won’t be able to resist the temptation to keep voters happy by propping up their purchasing power – which should create more demand for manufactured goods, too).    

(What’s Left of) Our Economy: U.S. Manufacturing Starts a Jobs Losing Streak

Tags

aircraft, aircraft engines, aircraft parts, automotive, banking crisis, Boeing, CCP Virus, chemicals, coronavirus, COVID 19, credit, Employment, fabricated metal products, food manufacturing, Jobs, machinery, manufacturing, metals, non-farm jobs, non-metallic mineral products, pharmaceuticals, plastics and rubber products, private sector, recession, semiconductors, soft landing, stimulus, surgical equipment, transportation equipment, vaccines, {What's Left of) Our Economy

U.S. manufacturing employment achieved a bad type of milestone in March, according to the official jobs data released today: Reflecting weakness in domestic industry, for the first time since the peak pandemic period of early spring, 2020, job levels fell for the second straight month.

The sequential decline was small – just 1,000. And the February dip was actually revised up from one of 4,000 to one of 1,000. But back-to-back losses of any kind haven’t been recorded since the CCP Virus began decimating the U.S. economy in March and April of 2020. Moreover, January’s modest monthly gain was downgraded a second time – from 13,000 to 11,000.

Because of these losses, and continuing economy-wide jobs gains, the March results worsened manufacturing’s status as an employment laggard since the pandemic’s arrival in force. Its payrolls have now risen by just 1.55 percent since February, 2020 – the last data month before the virus’ full economic effects began to be felt. That’s the same as the growth calculable from the previous jobs report.

For non-farm jobs overall (the federal government’s definition of the U.S. jobs universe), employment now stands 2.10 percent higher than in February, 2020, versus the 1.96 percent calculable from last month’s jobs report. And private sector employment is now up 2.71 percent during this period, versus the 2.46 percent calculable last month.

From another perspective, manufacturing jobs have dropped to 8.35 percent of total non-farm jobs – below the 8.36 percent calculable from last month’s release and the 8.39 percent level just before the CCP Virus’ arrival state-side in force. And they now account for just 9.76 percent of all private sector jobs, versus the 9.77 percent calculable from last month’s release and the immediate pre-pandemic share of 9.87 percent.

March’s biggest jobs winners among the broadest manufacturing sub-sectors tracked by Washington were:

>transportation equipment, a big, diverse grouping that added 6,400 positions. Moreover, this advance followed an upwardly revised 2,500 increase for February. Transportation equipment payrolls are now up 3.33 percent since immediately pre-pandemic-y February, 2020, versus the 2.82 percent calculable from last month’s jobs report;

>machinery, another broad category whose 3,800 employment monthly growth was encouraging because its products are used to equip and modernize nearly all manufacturing and non-manufacturing sectors. So changes in its workforce can signal optimism or pessimism about their prospects. In addition, this headcount expansion was the tenth in a row,and the March advance was the biggest since November’s 5,800 .

February’s initially reported 400 employment bump was revised down to 200, but machinery’s workforce is now 1.55 percent larger than in February, 2020, versus the 1.13 percent calculable last month;.

>food manufacturing, another big industry that added 3,400 workers and saw its initially reported 1,100 February employment drop revised up to a 1,400 improvement. Food manufacturing’s payrolls are now 4.52 percent greater than just prior to the pandemic’s arrival, versus the 4.26 percent calculable last month; and

>primary metal, a smallish sector that boosted employment by 1,800 in its best performance since last July’s 1,900. Just as good: It’s initially reported jobs cuts of 400 in February are now estimated at an increase of 300.

March’s biggest losers among the broad industry categories were:

>fabricated metal products, a big sector whose 4,100 contraction represented its second straight month in the red after 23 months of expansion, and its worst such performance since the 18,400 nosedive of July, 2020 – when the economy was recovering from the devastating first wave of the CCP Virus. Worse, February’s initially reported jobs decline of 1,100 was downgraded to one of 1,200.

Due to these dreary results, fabricated metals jobs have now shrunk by 1.45 percent since just before the pandemic and consequent lockdowns and voluntary behavioral curbs began kneecapping the economy in Febuary, 2020. As of last month’s jobs report, this figure stood at 1.15 percent;

>chemicals, another sizable industry, where 4,000 workers lost jobs – the worst such performance since December’s 5,900 plunge. February’s initially reported 2,500 employment growth was revised up to 2,900, but since just before the pandemic’s arrival in the United States in force, chemicals makers’ payrolls are now 6.96 percent higher, versus the 7.40 percent calculable last month.

>non-metallic mineral products, which saw a fall-off of 2,200 positions in its worst employment month since last month, when it shed 5,000 jobs. In addition, February’s initially reported jobs increase of 1,500 has been revised way down to one of 200.

These setbacks have depressed this small sector’s post-February, 2020 job growth from the 3.74 percent calculable last month to 2.81 percent; and .

>plastics and rubber products, a medium-sized category where 2,200 workers were let go. February’s initially reported 4,700 employment tumble was revised down to one of 4,400. But head counts in thse sectors are now 2.66 percent greater than just before the CCP Virus’ arrival in force, versus the 2.99 percent calculable last month.

Aside from machinery, RealityChek has been tracking employment in automotive manufacturing because of its special importance to industry overall and the economy in general.

Vehicle- and parts-makers boosted employment in March by 3,700, and February’s initially reported increase of 200 was upgraded all the way up to one of 1,300. These advances pushed automotive’s post-February, 2020 payrolls improvement from the 5.91 percent calculable last month to 6.45 percent.

RealityChek has also been monitoring several narrower sectors that have attracted special attention during the CCP Virus era, but where the data are always a month behind those of the above broader sectors, Their employment performances were overall positive but with one exception modestly so.

Although global semiconductor supplies in general are no longer in shortage, supply problems continue dogging certain industries (see, e.g., here), and of course Washington has now approved major long-term funding to boost output in the United States.

So it’s more than a little interesting that employment in the “semiconductors and related devices” category slipped by 600 in February for its second straight monthly fall-off. Moreover, that January decrease of 200 was initially reported as an increase of 300.

Consequently, the workforce in this sector is now 10.20 percent bigger than in immediately pre-pandemic-y February, 2020, versus the 10.79 percent calculable last month.

In aircaft manufacturing, which was damaged by pandemic-era travel curbs and Boeing’s production woes, a strong employment comeback continued in February. Companies in this industry added 1,300 employees that month. With,January’s 400 increase staying unrevised, aircraft employment closed to within 2.92 percent of its February, 2020 level, versus the 3.45 percent gap calculable last month.

The head count in aircraft engines and engine parts-makers surged by 900 in February, in those companies’ best such performance since last July’s identical number. January’s initally reported increase of 100 jobs is now revised down to no change, but payrolls in this sector are now just 7.10 percent off their immediate pre-pandemic levels, versus the 7.97 percent calculable last month.

Non-engine aircraft parts jobs jumped by 1,300 – the best such performance since last January’s 1,400. This past January’s initially reported gain of 100 was unrevised, leaving employment in these businesses off by 15.44 percent since just before the pandemic’s February, 2020 arrival in force. As of last month’s jobs report, the shortfall was 16.44 percent.

Surgical appliances- and supplies-makers turn out many of the products used to fight the pandemic, and their workforce expanded by 200 in February – their best such performance since last August’s 800. January’s initially reported gain of 100 was unrevised, too, leaving employment levels a surprisingly low 1.23 percent above immediate pre-pandemic levels, versus the 1.14 calculable last month.

Pharmaceuticals and medicines companies shed 300 jobs in February, but that retreat followed January net hiring that was revised down only from 1,800 to 1,700. These changes pushed post-February, 2020 employment growth in these industries down from 14.54 percent to a still healthy 14.41 percent.

The pharmaceutical sub-sector that contains vaccines added 300 jobs in February, its best such performance since its gain of 600 last October. January’s initially reported 100 employment decline was revised down to decrease of 300, leaving its workforce twenty percent greater than in immediately pre-pandemic-y February, 2020, versus the 19.90 percent calculable last month.

At this point, I’d expect manufacturing’s current hiring woes to ease before too long, mainly because I continue doubting that American politicians or central bankers will permit the economy to fall into major recession (or even slow down much further) as a new presidential election approaches, and because a post-pandemic rebound in civilian aircraft demand is already hiking production at Boeing and its vast supply chain. Pressures to increase defense budgets further, and significant federal support for infrastructure building and repair, and semiconductor output will help, too. 

Headwinds aren’t completely gone – mainly the possibility that hopes for an economic soft-landing prove naive (perhaps because of a banking turmoil-spurred credit crunch), and ongoing weakness in the foreign markets to which U.S. industry exports.  But at the very least, so far they seem no match for the stimulative gusts we can expect from American politics.        

(What’s Left of) Our Economy: The New Official Data Seem to Portend Still Higher U.S. Trade Deficits

Tags

Advanced Technology Products, ATP, banking crisis, China, election 2024, exports, Federal Reserve, imports, inflation, Made in Washington trade deficit, manufacturing, monetary policy, non-oil goods trade, stimulus, Trade, Trade Deficits, {What's Left of) Our Economy

Yesterday’s official report on U.S. trade flows (for February) almost eerily resembled its January predecessor. Change generally was modest in the broadest categories of trade balances, exports, and imports tracked by the U.S. Census Bureau. But numerous developments in the narrower categories were more dramatic, including a new record (in services trade), and some monthly results that haven’t been seen since the peak of the CCP Virus in early spring, 2020.

And another key way in which the February data resemble January’s:  They appear to support the case that the U.S. trade deficit is on an upward path again – and this despite mounting signs that economic growth is slowing (which all else equal should reduce the shortfall).    

The services best came on the export side, with these overseas sales rising from an upwardly revised $80.31 billion to an all-time high of $81.97 billion. This total surpassed the old mark of $81.32 billion (set in December) by 0.81 percent. And the sequential rate of increase (2.08 percent) was the fastest since last April’s 3.31 percent jump.

More broadly, the total trade deficit rose in February for the third straight month. But the increase – from an upwardly revised $68.66 billion to $70.54 billion – was an unexceptional 2.46 percent. At the same time, the figure was the highest since last October’s $77.16 billion.

The trade gap in goods widened, too, by three percent, from an upwardly revised $90.27 billion to $92.98 billion. This total was also the biggest since October ($98.62 billion).

A much better performance was turned in by services trade. Its longstanding surplus was up 3.86 percent sequentially in February, from a downwardly revised $21.61 billion to $22.44 billion.

Combined goods and services exports retreated from January’s upgraded $258.01 billion (the best such result since September’s $259.14 billion) to $251.15 billion. The decline was the fifth in the last six months and its 2.66 percent pace was the fastest since the 20.20 percent nosedive back in April, 2020 – well into the deep depression triggered by the devastating first wave of the CCP Virus.

Goods exports sank in February, too – also for the fifth time in the last six months, from a downwardly revised $177.70 billion to $169.18 billion. And the 4.80 percent sequential tumble was also the worst since pandemic-dominated April, 2020 – when they plummeted by 25.25 percent.

Total U.S. imports dipped by 1.53 percent on month in February, from an upwardly revised $3.26.67 billion to $321.69 billion. The decrease was the first since last November and the biggest since that month’s 6.34 percent.

The same story held for goods imports, which slipped by 2.17 percent month-to-month in February, from an upwardly revised $267.97 billion to $262.15 billion. This decline was also the first and biggest since last November (when they plunged by 7.38 percent.

Services imports not only grew by 1.42 percent sequentially in February, by $58.70 billion to $59.33 billion. They also were up from a January level that was revised up by a hefty 1.37 percent. The February number was just shy of the record $59.55 billion set last September.

The non-oil goods deficit inched just 0.29 percent in February, from $91.85 billion to $92.13 billion. It’s always worth following both because

>as known by RealityChek regulars, it can be considered the Made in Washington trade deficit, since non-oil goods are the trade flows most heavily influenced by U.S. trade agreements and other trade policy decision; and

>because it’s the closest global proxy for U.S.-China goods trade. As a result, comparing trends in the two can indicate the effectiveness of the Trump-Biden China tariffs, which cover hundreds of billions of dollars worth of Chinese products aimed at the U.S. market.

So in this vein, it’s more than a little interesting that the chronic and enormous American goods shortfall with the People’s Republic plummeted by fully 24.28 percent on month in February, from $25.16 billion to $19.00 billion. This new level is the lowest since pandemic-y March, 2020’s $11.71 billion, and the monthly decrease the fastest since last November’s 26.23 percent.

In February, U.S. goods exports to China fell for the fourth straight month – by 11.26 percent, from $13.09 billion to $11.62 billion. And that total is the worst since last April’s $11.20 billion.

The February fall-off in U.S. goods imports from China was the first in three months. Moreover, the 19.95 percent drop, from $38.25 billion to $30.62 billion, was the biggest since the 31.48 percent recorded in February, 2020, which was the peak of China’s (and the world’s) first covid wave.

Another big – and encouraging – move was made by U.S. manufacturing. It’s also chronic and huge trade gap narrowed for the third time in the last four months, from $116.83 billion to $100.05 billion. The 14.36 percent sequential fall-off was the biggest since the 23.09 percent in that peak-China covid February, 2020, and the monthly total the smallest since February, 2021’s $89.29 billion.

Manufacturing exports were down by 4.36 percent, from $105.71 billion to $102.52 billion. That figure is the weakest since last February’s $94.55 billion.

The February manufacturing imports decrease was nearly twice as fast – 9.69 percent, from $219.36 billion to a $198.10 billion level that’s the lowest since April, 2021’s $198.06 billion.

Consistent with the China and especially manufacturing results, the trade deficit in advanced technology products (ATP) saw its fourth straight contraction in February, too – specifically by 0.73 percent, from $16.35 billion to $16.23 billion. That total is the lowest since last February’s $13.42 billion.

ATP exports retreated for the second straight month – by 9.20 percent, from $32.07 billion to $29.12 billion. The decrease was the biggest since November’s ten percent, and brought these foreign sales to their lowest level since last February’s $29.02 billion.

Another four-month decline streak was registered by ATP imports, which dropped from $48.42 billion to $45.35 billion. This total was also the lowest since last February’s $42.44 billion, indicating that ATP trade is partly shaped by seasonal influences.

The February bilateral trade figures for some major U.S. trade partners reminded again of how volatile these flows can be (partly because of small absolute numbers of course).

America’s goods trade surplus with the United Kingdom (UK), for example, cratered by 68.40 percent on month, from $2.74 billion to $870 million. This total was the worst (for the United States) since the UK ran a $140 million surplus last June. The percentage change was the biggest since then, too.

But this nosedive followed the U.S. surplus’ 80.47 percent increase to that January $2.74 billion total that was a new all-time best, eclipsing the old mark of $1.87 billion from immediately pre-pandemic-y February, 2020 by 47.40 percent.

The U.S. goods deficit with France, however, fell by 57.86 percent on month in February, from $1.17 billion to $490 million. This shortfall was the smallest since last September’s $470 million, and the decrease was the bigest since last May’s 66.09 percent.

The U.S. surplus with the Netherlands sank by 42.46 percent, from $3.20 billion to $1.84 billion. This figure was the lowest since January, 2022’s $1.79 billion and the biggest decrease since last November’s 42.86 percent.

The trade gap with Thailand was down 35.68 percent sequentially, from $3.74 billion to $2.40 billion. This February number is the lowest monthly level since February, 2021’s $2.23 billion, and the fall-off the greatest since the 40.60 percent in November, 2006 – when bilateral trade was much more meager.

Finally, the longstanding U.S. goods gap with India narrowed by 33.61 percent, from $4.99 to $3.31 billion. This total was the lowest only since December’s $2.41 billion. But the decline was the biggest since February, 2021’s 34.09 percent. And it followed a more than doubling (106.51 percent) of the shortfall in January that was the biggest since January, 2019’s 224.17 percent.

Just as the overall February U.S. trade results closely tracked those of January, the deficit outlook does, too. That’s largely because the developments pointing to more American import-attracting spending (like politicans’ temptation to stimulate the economy as a new presidential election approaches and what I’m increasingly convinced is a determination by the Federal Reserve to back off its recession-threatening inflation fight) look stronger than those signaling less of that spending (like an economic weakening that looks likelier principally because of the lagged effect of the monetary tightening already begun by the Fed, and because a credit crunch will likely emerge due to the recent banking jitters).

Add in ongoing and possibly greater weakening of the global economy – which will undermine U.S. exports – and it’s easy to see why higher U.S. trade deficits seem in the offing.

Making News: Back on National Radio Examining the U.S.’ China Containment Strategy

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Asia, CBS Eye on the World with John Batchelor, Central America, China, decoupling, DR-CAFTA, friend-shoring, Gordon G. Chang, Immigration, Latin America, Making News, manufacturing, Mexico, NAFTA, national security, North American Free Trade Agreement, tariffs, Trade, U.S.-Mexico-Canada Agreement, USMCA

I’m pleased to announce that I’m scheduled to be back tonight on the nationally syndicated “CBS Eye on the World with John Batchelor.” Our subject – whether the trade and security elements of America’s strategy for countering the China threat are too often tripping over each other.

No specific air time had been set when the segment was recorded this morning. But the show – also featuring co-host Gordon G. Chang – is broadcast beginning at 10 PM 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.

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

(What’s Left of) Our Economy: U.S. Manufacturing Output Surprises to the Upside Again

Tags

aerospace, aircraft, aircraft parts, automotive, banking crisis, CCP Virus, chemicals, computer and electronics products, coronavirus, COVID 19, Federal Reserve, inflation-adjusted output, interest rates, machinery, manufacturing, manufacturing production, medical equipment, miscellaneous non-durable goods, monetary policy, pharmaceuticals, plastics and rubber products, recession, semiconductors, textiles, wood products, {What's Left of) Our Economy

Remember one of the signature expressions of 1960s sitcom character Gomer Pyle – “Surprise, surprise, surprise!”? That was my reaction to this morning’s Federal Reserve release on U.S. manufacturing production for February, which reported a second straight increase.

The February improvement was pretty marginal to be sure – 0.12 percent in after-inflation terms (the kind of numbers that will be presented here unless otherwise specified). And since its production is down on net since last February, domestic industry is still in recession. But any official gain in the hard data is noteworthy, given the lousy February sentiment-based survey results put out by many of the Federal Reserve’s regional branches (e.g., here), which have continued into March (e.g., here), and by leading private sector groups (e.g., here).

Also unexpected: January’s increase was revised up from one of 0.94 percent to one of 1.35 percent. That’s the best such performance since October, 2021’s 1.70 percent. So maybe that January figure wasn’t a one-off, as I speculated last month?

That’s not clear yet. Both the January and February advances also might still stem from a baseline effect – specifically, catch-up from an absolutely terrible December. That month’s manufacturing output decline has now been revised down a second time. Its 2.06 percent sequential dropoff is the worst such result since the 3.64 percent nose-dive in weather-affected February, 2021. But as that journalistic cliché goes, “It’s too soon to tell.”

Here’s what we do know – so far (keeping in mind that revisions of all statistics going back to 2021 will be issued on March 28).

The February report means that U.S.-based manufacturing output is now up since since just before the CCP Virus pandemic arrived stateside in force in February, 2020 by 1.65 percent – the same figure calculable from last month’s Fed release.

Only seven of the 20 broadest manufacturing sub-sectors tracked by the Fed boosted their production in February. The biggest winners were:

>the very big chemicals industry, which expanded output by 1.24 percent. Better yet, this growth came after a January increase of 3.11 percent (the best such performance since April, 2021’s 3.97 percent). The January pop looks like catch-up from December’s 2.63 slump (the worst such performance since weather-affected February, 2021’s 6.69 percent cratering). But the February follow-on could be a sign of truly regained strength.

Since immediately pre-pandemic-y February, 2020, chemicals production is up 7.52 percent, versus the 6.11 percent calculable last month;

>computer and electronic products, where production advanced for the first time since last September – and by 1.22 percent. But now it’s contracted by 0.62 percent during the CCP Virus era, versus having grown by 2.95 percent as of last month’s release; and

>wood products, whose output rose for the second straight month after having slumped for most of the past year. Not so coincidentally, this losing streak paralleled the housing industry woes prompted by the Federal Reserve’s historically rapid interest rate hikes. The February 1.11 percent gain was the best since the 2.81 percent surge last February.

But the wood products industry is still 2.49 percent smaller than it was just before the pandemic’s arrival in force, versus the 2.56 percent calculable last month.

The biggest February maufacturing output losers were:

>textiles and products, which saw production sag by 2.11 percent, the biggest decrease since last June’s 3.44 percent. The fall-off depressed output in this small sector to 12.96 percent below its February, 2020 level, versus the 8.93 percent calculable last month;

>plastics and rubber products, whose production decrease of 1.82 percent was its seventh straight monthly loss, and dragged its output losses down to 5.62 percent below its immediate pre-pandemic levels versus the 4.33 percent calculable last month; and

>miscellaneous non-durable goods, where output slipped by 1.52 percent, and pushed production down to 14.95 below its pre-pandemic level versus the 13.76 percent calculable last month.

Output also drooped in two sectors of continuing special importance to all of industry and the entire economy.

The story of CCP Virus era U.S.-based manufacturing has been in many respects a story of the automotive sector, and in February, vehicle and parts production dipped by 0.28 percent. This advance helped it draw to within 0.12 percent of its size in February, 2020, from the 1.61 percent shortfall calculable last month.

The diverse machinery industry, meanwhile, is crucial both to the rest of manufacturing and to the entire economy because its products are used so widely for retooling and modernization. So its growth indicates general manufacturing and overall business optimism, and vice versa.

Ordinarily, therefore, a moderately 0.40 percent monthly decline in machinery output would be moderately bearish, but the sector has been too volatile lately to be certain. The February decline followed a 3.42 percent burst that was the strongest since 5.12 percent pop of January, 2021. That’s a sign of a catch-up effect.

But the January results followed a 2.59 percent tumble in December that was the worst since last May’s 3.34 percent. All told, however, machinery output is now 5.54 percent greater than just before the pandemic struck, versus the 4.77 percent calculable last month.

Manufacturing sectors of special importance since the pandemic struck also suffered generally lousy Februarys performances.

The semiconductor shortages that have caused so many headaches for U.S. and foreign manufacturers seem to be easing, but supplies remain inadequate for many customers. And the situation won’t be helped by the 1.65 percent real output decrease U.S.-based chip production suffered in February.

Worse, this decrease was the sector’s eighth in a row – and some of these estimates have been revised down substantially. Due to these poor and worsening results, whereas as of last month’s Fed release, U.S. semiconductor output was 4.47 percent above its immediate pre-CCPVirus levels; now it’s 7.83 percent below.

Medical equipment and supplies, which contains the healthcare products used so widely to combat the pandemic, suffered a 0.73 percent real output contraction – its fifth straight monthly decrease.

Medical equipment and supplies output in February dropped for the fifth time in the last six months. But even with this latest 0.51 percent retreat, production in this sector – which includes so many of the products used to fight the CCP Virus – is now 10.52 percent higher than jut before the pandemic hit, versus the 9.85 percent calculable last month.

Production in pharmaceuticals and medicines was off by 0.54 percent in February, but the decrease was the first since last July, and depressed this big sector’s growth since immediately prepandemic-y February, 2020 to 20.42 percent versus the 21.44 percent calculable last month.

The exceptions to this pattern were aircraft and aircraft parts-makers – possibly because industry giant Boeing’s fortunes seem to be looking up finally. Their output increased by 0.35 percent in February, and is now up 30.19 percent since the advent of a pandemic that long hammered travel of all kinds, versus the 35.81 percent calculable last month.

What lies ahead? The entrails remain difficult to read, especially since the new banking crisis is creating doubt as to whether the Federal Reserve will continue an inflation-fighting effort it’s been making vigorously but that still hasn’t produced the economy slowdown it’s seeking – but that may at some point because these monetary tightening moves typically don’t start working for many months. See what I mean? 

If the central bank remains on course, domestic manufacturing’s troubles seem certain to return. But as long as the economy keeps defiantly expanding, its power may bring U.S.-based industry securely back into growth mode.

(What’s Left of) Our Economy: U.S. Manufacturing’s Employment Win Streak Comes to an End

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A payrolls loss even as the rest of the American economy continued to create gobs of jobs – that was the big manufacturing takeaway from this morning’s official release on U.S. employment for February.

Although job creation for the non-farm economy (the federal government’s definition of the U.S. employment universe) came in at a robust 311,000, domestic industry shed headcount (by 4,000) for the first time since April, 2021.

Moreover, the modest manufacturing job increase of January, which contrasted so strikingly with the blowout performance recorded by non-farm businesses overall, was revised down – from an initially reported 19,000 to 13,000. The initially reported January total U.S. jobs gain of 517,000 was reduced this morning as well. But unlike the manufacturing results, the new figure (504,000) is still astronomical.

The new February numbers pushed U.S.-based manufacturing deeper into CCP Virus-era employment laggard status. Since February, 2020 (just before the pandemic arrived in force in the United States), domestic industry has boosted headcount by 1.55 percent. the private sector overall by 2.59 percent, and the non-farm sector (which includes public sector workers at all levels of government) by 1.96 percent.

As of last month’s release, manufacturing jobs were up 1.67 percent since February, 2020, private sector jobs up 2.46 percent, and non-farm jobs up 1.77 percent.

Consequently, manufacturing’s share of non-farm jobs has sunk from the 8.38 percent calculable as of last month’s report to 8.36 percent, and from its immediate pre-pandemic level of 8.39 percent.

And its share of private sector jobs is down from the 9.80 percent calculable last month to 9.77 percent, and from its immediate pre-pandemic level of 9.87 percent.

February’s biggest manufacturing jobs winners were:

>computer and electronics products, which added 2,800 workers on month fo its best such performance since last October’s 3,300. In addition, January’s initially reported 700 employment drop is judged to be an increase of 100.

These companies’ workforces are now 2.08 percent higher than in immediately pre-pandemic-y February, 2020, versus the 1.77 percent increase calculable last month;

>chemicals, whose payrolls expanded by 2,500 in a resumption of a multi-year string of healthy monthly gains. Indeed, this sequential advance followed an upwardly revised loss of 1,400 jobs that was the sector’s worst such performance since the 2,200 decline in May, 2021.

Chemicals employment is now 7.40 percent greater than it was just before the pandemic struck versus the 6.80 percent growth calculable as of last month;

>beverage, tobacco and leather products (a new name for miscellaneous non-durable goods), which hired 1,900 workers in February. January’s initially reported rise of 5,000 (which had been its best such performance since last June’s 6,300 surge) has now been downgraded to one of 3,100, but remained strong nonetheless.

Job levels in this sector, therefore, are still up by an impressive 10.42 percent since February, 2020 – down just slightly from the 10.45 percent calculable last month; and

>non-metallic mineral products, which boosted payrolls by 1,500, but whose excellent first-reported January results (4,200 – thought to be the best since last February’s 5,600 pop) have also been downwardly revised (to 1,700).

Companies in this sector have now boosted their workforces by 3.74 percent since the virus’ arrival state-side in force, versus the 4.02 percent calculable last month.

February’s biggest manufacturing jobs losers were:

>plastics and rubber products, where employment fell by 4,700 to resume a weak employment stretch that began last October. January’s gain, meanwhile, was revised from 1,200 to 1,100.

Employment in these industries is now 2.99 higher than in February, 2020 – above the overall manufacturing figure but down from the 3.52 percent calculable last month;

>furniture and related products, which also continued a recent losing streak by cutting 2,800 positions. At least January’s initially reported decrease of 700 has been upgraded to one of 500. Headcounts in these sectors are now off by 3.60 percent since the CCP Virus began roiling the U.S. economy in February, 2020, versus the 2.71 percent calculable last month;

>textile mills, a very small sector whose 1,700 jobs retreat was its worst such perfomance since the identical decrease in July, 2020 – as the economy had begun recovering from the effects of the CCP Virus’ first wave. Further, January’s initially reported 900 jobs gain was revised down to one of 700.

These results left textile mill employment 10.88 percent lower than in February, 2020 versus the 8.91 percent calculable last month; and

>apparel, another very small industry, which cut employment by 1,300. This loss, moreover, comes on top of a January drop of 1,900 that was initially reported as one of 2,100. The apparel workforce is now 11.32 percent smaller than just before the pandemic’s arrival in force, versus the 9.02 percent calculable last month.

RealityChek has also been tracking employment in two industries of special importance to manufacturing and the economy overall, and both eaked out tiny hiring increases in February.

Machinery data have been an emphasis because its products are used to equip and modernize nearly all manufacturing and non-manufacturing sectors. So changes in its workforce can signal optimism or pessimism about their prospects.

This big, varied sector extended its monthly job creation winning streak to nine in February, but by a bare 400. January’s results remained in the black, too, but were revised down from an increase of 2,000 to one of 1,000. Payrolls in machinery have now grown by 1.10 percent since just before the pandemic era began, in February, 2020, versus the 1.13 percent calculable last month.

Automotive’s February headcount gain was even smaller – just 200. Nor was it much of a rebound from January’s contraction, which was revised up from one of 6,500 loss to one of 5,100. But the automotive workforce is now 5.91 percent larger than in February, 2020, versus the 5.70 percent calculable last month.

Monitored by RealityChek as well have been several narrower sectors that have attracted special attention during the CCP Virus era, but where the data are always a month behind those of the above broader sectors, Their employment performances were overall positive but with one exception modestly so.

The shortages plaguing the semiconductor industry have bled over into much of the rest of the economy in recent years, which largely explains why Washington has now decided to spend tens of billions of dollars over the next decade to support more domestic production.

Jobs in the category called “semiconductors and related devices” inched up by 300 in January, but – continuing a pattern described above elsewhere in manufacturing – December’s initially reported increase of 800 is now judged to have been just 400. The workforce in this grouping has now grown by 10.79 percent since just before the pandemic struck in full force – a figure that’s better than it looks since these companies’ cut relatively few jobs during the short but deep virus-induced downturn of spring, 2020.

Aircaft manufacturing was pummeled by a combination of pandemic-era travel curbs and Boeing’s production woes, but employment lately has staged a strong comeback. January’s net new hires numbered 400 and December’s initially reported jump of 1,100 has been upgraded to one of 1,500.

Job levels in the sector have now closed to within 3.45 percent of their immediate pre-pandemic numbers, versus having been down 5.56 percent as of last month’s jobs report.

Aircraft engines and engine parts-makers added just 100 new employees in January, but December’s increase of 800 – the best such performance since July’s 900 – remained unrevised. Their payrolls are now just 7.97 percent lower than their immediate pre-pandemic total versus the 8.08 percent shortfall calculable last month.

Non-engine aircraft parts producers reduced their workforces by 100 in January, but December’s hiring increase was revised from 100 to 200. So their headcounts are still off by 16.44 percent during the pandemic period – the same figure calculable last month.

Surgical appliances- and supplies-makers have been in the spotlight since the virus’ arrival in force, since this grouping contains so many of the products used to fight the pandemic. They increased their workforces by 100 in January, but December’s initially reported loss of 400 is now judged to have been one of 500.

As with non-engine aircraft parts their employment level since February, 2020 stayed the same as calculable in December, but in the case of surgical appliances and supplies, the change has been positive – by 1.14 percent.

The big pharmaceuticals and medicines sector was a notable exception to this employment pattern of marginal change, as its companies’ boosted employment by 1,800. But these gains followed December cuts that were upgraded from an initially reported 1,100 to 2,000 – the sector’s worst such performance since the 2,900 nosedive last July.

Yet upward revisions in previous months enabled the gain in the pharmaceuticals and medicines employment to rise since February, 2020 from the 14.25 percent calculable last month to 14.54 percent.

The news was much worse in the pharmaceutical sub-sector that contains vaccines. Employment tumbled in January for the second straight month (by 100) and December’s initially reported plunge of 1,200 is now pegged as one of 1,300.

These drops depressed this grouping’s employment expansion since immediately pre-pandemic-y February, 2020 – but only from the 20.10 percent calculable last month to a still sterling 19.90 percent.

With the U.S. economy lately growing more vigorously than widely predicted, it’s certainly possible that its surprising strength will bring an end to manufacturing’s ongoing production recession and its recent weak hiring.  And the federal government has certainly been trying to lend a helping hand via the aforementioned semiconductor subsidies, along with an infrastructure bill, and  green subsidies – both of which contain Buy American requirements. 

But it’s also possible that the last few months’ worth of data are telling us that the fortunes of manufacturing and the rest of the domestic economy are being decoupled.  Indeed, industry’s still towering trade deficit is one indication, making clear that the consumption of manufactures remains much greater than their production. 

Compounding the uncertainty:  February’s manufacturing jobs loss could be washed away via revisions in next month’s jobs report.  But at the least, this first employment drop in nearly two years might signal that domestic manufacturers are no longer hoarding workers as zealously as other sectors of the economy have been.  If so, expect manufacturing employment to continue stagnating.