(What’s Left of) Our Economy: Tariff-Led U.S. Inflation Remains Mythical

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aluminum, appliances, beer, cans, Emily Rauhala, inflation, Labor Department, laundry equipment, metals, metals-using industries, Producer Price Index, steel, tariffs, Trade, Trump, Washington Post, wholesale prices, {What's Left of) Our Economy

Talk about bad timing! Yesterday, the Washington Post ran a piece by Emily Rauhala, who covers Canada and other foreign news for the paper, on how soaring tariff-juiced aluminum prices are already “bruising” the American beer industry. According to her report, “In a vivid example of how Trump’s trade tactics abroad can hurt business at home, the U.S. beer industry, which needs aluminum to make cans, is seeing costs rise.”

But this morning, the U.S. Labor Department came out with data showing that, although prices for aluminum (along with steel, another tariff-ed metal) have jumped from last October to this past October, they’re now actually starting to fall. And special bonus! The same trend seems to be holding for household laundry equipment.  Product-specific tariffs boosted prices for a time, and generated big headlines, but now the price are falling back to earth.

The new Producer Price Index (which measures price changes at the wholesale level) reports that “aluminum mill shapes” last month cost buyers 8.2 percent more than they did in October, 2017. But since July, they’ve dropped on a monthly basis by 2.1 percent, 0.3 percent, and 0.4 percent.

Further, it’s important to remember that, as with steel and the laundry machines, last year’s prices were artificially depressed by foreign dumping. In other words, these prices were set by foreign governments determined to grab market share for their producers at the expense of their American-based rivals. They had nothing whatever to do with market forces.

The statistics for “steel mill products”? Between October, 2017 and October, 2018, prices did indeed surge by 18.2 percent. But the monthly numbers since July reveal price changes of +2.6 percent, zero percent, and -0.8 percent.

Also significant: In lots of metals-using industries, there are no major year-on-year price increases at all. These include hardware, plumbing fixtures, turned products (like bolts and nuts and screws), metal valves, ball bearings, auto parts, aircraft parts, and aircraft engines and parts (which are tracked separately).

The price data for household appliances are found in a another of today’s Labor Department tables, and don’t separate out laundry equipment from other appliances where no special tariffs were applied. But they strongly indicate that any producers thinking they’d gain major pricing power from these levies were utterly delusional.

From October, 2017 through last month, prices in this category were up only 3.3 percent. And the last three months’ worth of sequential changes? Down 0.1 percent, up 1.3 percent, and down 0.7 percent. Think we’ll see this development  generate any headlines?

As with investing, past performance doesn’t always predict future results. But it’s not bupkis, either. At some point, President Trump’s tariffs may indeed supercharge U.S. inflation. To date, however, trade-related inflation reports at best deserve the warning, “Let the buyer beware.”

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(What’s Left of) Our Economy: “Tariff Victim” US Industries Remain Full of Job Openings

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business, China, durable goods, employers, job openings, Jobs, JOLTS, labor shortages, manufacturing, metals tariffs, metals-using industries, private sector, quits, tariffs, Trade, Trump, workers, {What's Left of) Our Economy

If today’s government data on U.S. jobs openings don’t prompt loud mea culpas and apologies from the tariff-alarmists in the Mainstream Media and elsewhere in America’s globalization cheerleading establishment, I don’t know what will.

Recall that Americans have been swamped in recent months with reports that President Trump’s trade curbs have already been decimating American manufacturing.  And since they have been in place the longest, his metals tariffs (on most steel and aluminum imports) have been treated as prime examples, with metals-using industries being the prime victims.

But the new figures on job openings in major sectors of the economy (contained in the latest monthly release of the “JOLTS” numbers – the “job openings and labor turnover series”) are simply the latest statistics thoroughly debunking these claims.

Here are the results for job openings from April (because the metals tariffs began to be imposed in late March) through September (the most recent month covered by the JOLTS reports):

private sector:     +2.30 percent

manufacturing:   +7.08 percent

durable goods:   +7.47 percent

As has been the case with so much other data, the durable goods super-sector of manufacturing – the portion of industry containing the biggest metals-using industries – outperformed the rest of manufacturing and the entire economy in the number of employment opportunities it claimed were available.

And although the number of job openings in durable goods dipped from August to September (whose figures are still preliminary), they fell much less than in the rest of the economy.

private sector:     -2.85 percent

manufacturing     -4.72 percent

durable goods     -0.66 percent

Moreover, the 302,000 durable goods jobs openings reported preliminarily in September were the second largest number on record (going back to late 2000). The all-time high? August’s 304,000.

Some critics maintain that employers have incentives to exaggerate their claims of job vacancies. The motives cited include reinforcing contentions of “skills gaps” and other forms of labor shortages; rationalizing the persistence of high unemployment rates or sluggish wage growth; and pushing government or schools to take on worker training responsibilities (and expenses) that employers are loathe to assume. It’s also easy to see how exaggerated job openings claims can be used to bolster arguments for more immigration – which of course is also a tempting strategy for keeping wages down by increasing labor supply relative to demand.

But even if such exaggeration is rife, why would it be so much more important in durable goods manufacturing than in the rest of the economy? Further, why would employers have any reason to overstate the number of vacancies they’re trying to fill if they believed that their businesses were being swamped by steep, tariffs-led costs increases, or were about to? Wouldn’t they be trying to shed payroll instead? As a result, it’s hard to escape the conclusion that the JOLTS openings numbers simply add to the evidence that, despite the claims of actual or impending tariffs-mageddon, metals-using industries continue to be faring just fine.

Interestingly, workers in durable goods sectors don’t appear to share this optimism fully, according to the JOLTS data. For the figures also measure the numbers of employees voluntarily leaving their jobs – a clear sign of confidence that lots of new opportunities are available. Here are are the April-through-September results:

private sector:     +8.53 percent

manufacturing:    -2.94 percent

durable goods:     -9.48 percent

Clearly, durable goods workers have been displaying less confidence about reemployment opportunities than their counterparts in the rest of manufacturing, and much less than private sector workers overall. And these results are mirrored in the August-to-September numbers:

private sector:     -1.26 percent

manufacturing:    -6.60 percent

durable goods:   -11.76 percent

Nonetheless, in absolute terms, all these quits levels – even for durable goods – remain pretty high by recent standards. And for durables, they’re somewhat volatile, possibly because the absolute numbers have always been on the small side. Indeed, durable goods quits increased by 6.19 percent month-to-month as recently as July. And the August-to-September drop-off was the biggest sequential decline in percentage terms since the 15.70 percent monthly nosedive in August, 2017 – after which the numbers of quits steadily recovered.

As always, these trends could change (or, with the quits rate) intensify. It’s also possible that the President’s more sweeping tariffs on imports from China will be game-changers. (The first round dates only from early July, and the second, much larger round, went into effect in mid-September.) For now, however, the only real news about the economic effect of these levies is that they’ve showed no signs of slowing the recovery’s current momentum. Accept no substitutes.

(What’s Left of) Our Economy: More Terrible Data for…the Metals Tariffs Alarmists

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aluminum, durable goods, Jobs, manufacturing, metals tariffs, metals-using industries, Peanuts, Samuel Beckett, steel, tariffs, Trade, Trump, Waiting for Godot, {What's Left of) Our Economy

Remember Waiting for Godot? For those who haven’t read it, in a (very superficial) nutshell, Samuel Beckett’s 1953 existentialist masterpiece tells the story of two men who keep waiting for someone who never comes despite promises of his arrival that keep getting proved wrong. Think of the play as a world-class literary and philosophical version of the running Peanuts gag involving Lucy holding the football for a Charlie Brown place-kick.

Both Godot and Peanuts came to mind instantly this morning once I digested the new U.S. manufacturing jobs figures (for October). For as has been the case since late March, when President Trump began in imposing tariffs on metals imports, the job-creation performance of American metals-using industries once again defied the doomsayers by generally outperforming job-creation in the rest of domestic manufacturing, and in the U.S. private sector as a whole.

Here are the detailed numbers for October and September (which are still preliminary) and for August (which are now final – until the next major revision):

                                        through August     through September     through October

entire private sector:        +0.68 percent          +0.77 percent           +0.97 percent

overall manufacturing:     +0.61 percent          +0.75 percent           +0.82 percent

durable goods:                  +0.82 percent         +1.00 percent            +1.27 percent

fabricated metals products: +1.09 percent      +1.16 percent             +1.16 percent

non-electrical machinery:   +1.23 percent       +1.37 percent            +1.80 percent

automotive vehicles & parts: -0.03 percent     +0.07 percent            +0.78 percent

household appliances:          -0.31 percent        -0.31 percent             not available

aerospace products & parts:  +3.12 percent    +3.71 percent              not available

Consistent with data for the preceding months, the results are somewhat uneven. The automotive and appliances sectors have been under-performing considerably. (The latter, of course, was hit with household laundry machine tariffs a little before the metals tariffs began.) And momentum is slowing in fabricated metals products. But the rate of payroll increases everywhere else keep exceeding those for manufacturing overall, and even the durable goods super-sector – where the metals use in manufacturing is heavily concentrated. In addition, the momentum for motor vehicles and parts is strengthening.

Nothing in economics lasts forever. But the Cassandras who have been claiming both that the metals tariffs will surely decimate American metals-using industries, and that the damage is already visible, clearly need to rethink their narratives. Because with each passing month, they look just as clueless as Vladimir, Estragon…and good old Charlie Brown.

(What’s Left of) Our Economy: Despite Tariff Alarmism, “Victim Industries'” Manufacturing Output Remains Strong

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China, Federal Reserve, industrial production, inflation-adjusted output, manufacturing, metals-using industries, tariffs, Trump, {What's Left of) Our Economy

The Federal Reserve’s new (September) industrial production figures contained the latest evidence that President Trump’s metals tariffs are showing no sign of harming America’s metals-using industries. Indeed, on top of their inflation-adjusted output generally remaining impressive compared with that of the rest of domestic manufacturing, industries that had apparently paid a high price for the levies (chiefly major appliances, where separate safeguard tariffs on household laundry equipment have been in place since February) have made up lost ground dramatically.

Moreover, although they began only in July, the industrial production figures so far show no reason to believe that Mr. Trump’s China tariffs are undermining domestic industry, either.

Here’s how major metals-using industries have done in terms of generating real growth between August and September (according to this morning’s preliminary data) – along with the numbers for manufacturing as a whole, and durable goods as a whole (the super-category in which the heaviest metals users tend to be found). This table also includes the previously released and new July-August results.

                                            Old July-Aug       New July-Aug           Aug-Sept

overall manufacturing:       +0.28 percent       +0.29 percent         +0.24 percent

durable goods:                  +1.01 percent         +1.08 percent         +0.59 percent

fabricated metals products: +0.22 percent       +0.51 percent        +0.05 percent

machinery:                          +1.07 percent       +1.87 percent        +0.88 percent

automotive:                         +4.02 percent       +4.27 percent        +1.70 percent

small appliances:                 +0.81 percent      +1.98 percent        +1.34 percent

major appliances:                 -2.76 percent        -1.58 percent        +3.26 percent

As with domestic manufacturing as a whole, the metals-users experienced a sequential production slowdown in September – and in fact one that exceeded that for manufacturing overall. But this slowdown came right after a July-August performance that was much stronger than for the rest of industry, and where revisions were much more positive.

The longer-term statistics tell much the same story – including about a big comeback for appliance production. Here are the real output data since April (used as the baseline since the metals tariffs were imposed beginning in late March):

                                               old thru Aug       new thru Aug       thru Sept

overall manufacturing:          0.54 percent       +0.52 percent    +0.76 percent

durables manufacturing:     +0.48 percent       +0.82 percent    +1.41 percent

fabricated metals products: +0.79 percent       +1.22 percent    +1.28 percent

machinery:                           +0.09 percent      +1.93 percent    +2.84 percent

automotive:                         -0.63 percent        -0.30 percent    +1.39 percent

small appliances:                 -5.33 percent        -2.54 percent     -1.23 percent

major appliances”                -5.25 percent        -4.00 percent     -0.87 percent

Finally, although the China tariffs are much more recent, reports are already appearing claiming that they, too, are backfiring on American industry. Yet just as with the metals tariffs, the official data refute these claims. Here are the real output figures for manufacturing as a whole, and its two super-sectors, for the two months preceding the first tariffs on imports from China and for the two months following them:

                                                         May-July                             July-Sept

overall manufacturing:                 +1.15 percent                      +0.54 percent

durable goods:                              +1.28 percent                      +1.68 percent

non-durable goods:                       +1.01 percent                       -0.63 percent

True, a slowdown is apparent. But it’s entirely due to weak performance in the non-durable goods sector. And it’s likely that this setback owes at least partly to Hurricane Florence, since among the worst results were those in the textiles sector, which boasts a large presence in the Southeastern United States.

As always, the data going forward could change the tariff-impact picture significantly. It will need to for the narrative to start finally matching up with the reality.

(What’s Left of) Our Economy: Raging Tariffs-Led Inflation Still Isn’t a Thing – or Even Close

Tags

aluminum, Canada, household appliances, housing, inflation, metals-using industries, Producer Price Index, producer prices, softwood lumber, steel, tariffs, Trump, washing machines, {What's Left of) Our Economy

Good luck to everyone trying to find some signs in this morning’s producer price report of President Trump’s tariffs igniting ruinous, raging inflation throughout the U.S. economy. How come? Because they aren’t there. Yet again.

Let’s quickly examine some of the main products in the tariff spotlight, starting with washing machines, imports of which were slapped in February with levies aimed at countering sharp surges of product streaming into U.S. markets that harm domestic producers (called “safeguard tariffs).

Even though this Producer Price Index (PPI) data from the Labor Department focus on inflation or lack thereof for wholesalers, it does contain information on the consumer goods in which wholesalers deal. This morning’s report shows that prices for “household appliances” (including several products aside from the tariff-ed washing machines) rose by 4.1 percent from September, 2017 to September, 2018. That’s higher than the 2.7 percent year-on-year overall advance for such goods less the volatile food and energy sectors. But it’s anything but the steepest price rise in this category.

Moreover, on a monthly basis, household appliance prices don’t seem to be going anywhere lately. Between June and July, they actually fell by 0.2 percent. From July to August, they dipped another 0.1 percent. From August to September, they increased by 1.3 percent. Again, that’s greater than the 0.1 percent average for “Final demand goods less foods and energy.” But not excessively so. P.S.: Household appliance prices are affected by many factors other than tariffs.

How about steel and aluminum, where a series of tariffs began to be imposed in late March? Steel mill product prices did indeed jump by 18.1 percent year-on-year in September. But here are the last three monthly prices changes: +1.6 percent, +2.6 percent, and zero percent. So let’s hold off on the inflation alarmism here, too. And don’t forget: Thanks to Chinese and other foreign subsidies, steel prices have long been depressed for reasons having almost nothing to do with free market forces. So the tariffs have mainly been encouraging the restoration of accurate price signals – something that all free market supporters should regard as key to long-term economic health and prosperity.

The ebbing of inflation is even more striking when it comes to aluminum mill shapes. In September, their prices rose by a sharp 10.1 percent on an annual basis. But over the last three months? They’ve actually fallen significantly – by three percent, 2.1 percent, and 0.3 percent, sequentially. So thanks to the tariffs, normality seems to be returning to the aluminum market, too.

Much the same story is being played out in metals-using sectors – where reports of tariffs-caused devastation have been widespread. The pricing developments in fabricated structural metals products are a typical example: up 8.3 percent year-on-year in September, down sequentially by 0.6 percent in July, up by 0.2 percent in August, up by 0.5 percent in September.

Softwood lumber from Canada is another important economic input being tariff-ed by President Trump – this time since last November. Of course, they resulted in forecasts of impending disaster for the U.S. housing industry. But the PPI report shows that softwood lumber prices were up only 5.4 percent on year in September, and have been dropping sharply on month since July – by 2.5 percent, 9.6 percent (I repeat: 9.6 percent!), and 0.4 percent. That looks like deflation, not inflation.

To repeat a point I’ve made often, it’s entirely possible that these pricing trends could reverse themselves in the months ahead. But since we’ve seen nothing of the kind so far, it’s also entirely legitimate to suppose that current trends will continue – and important to start examining possible reasons why. Even though such an exercise will doubtless be more difficult and less fun that repeating forecasts of Tariffs-mageddon.

(What’s Left of) Our Economy: Metals Tariffs Damage Still Showing Up Everywhere Except the Data

Tags

aluminum, Jobs, Labor Department, metals, metals-using industries, steel, tariffs, Trade, Trump, {What's Left of) Our Economy

This morning’s September U.S. jobs figures from the Labor Department once again expose as nonsense the long string of news reports claiming that President Trump’s metals tariffs are already causing tremendous damage to American domestic metals-using industries

As with preceding jobs reports, and other official economic data (such as output and capital spending statistics), the new non-farm payrolls reading makes clear that most of the sectors that are major users of the two tariff-ed metals – steel and aluminum – are more than holding their own on the employment front. In fact, most are out-hiring not only the rest of manufacturing. They’re out-hiring the entire private sector.

And although harm may come in the future, these jobs figures place burden of proof on the pessimists. After all, if, as often noted, many metals purchasing contracts are locked in – for, say, six- or twelve-month periods – why would metals users keep hiring robustly if they were certain they’d face devastating price hikes down the road?

So here are the latest numbers showing the relevant rate of employment changes from April (the first full months in which the metals tariffs were in effect) through July (the newest final – for now – data), through August, and through September:

                                                 through July        through Aug.         through Sept.

entire private sector:              +0.47 percent        +0.67 percent       +0.76 percent

overall manufacturing:          +0.52 percent        +0.56 percent       +0.70 percent

durable goods:                       +0.68 percent        +0.75 percent       +0.96 percent

fabricated metals products:    +0.91 percent        +1.19 percent       +1.44 percent

non-electrical machinery:       +1.23 percent       +1.14 percent       +1.29 percent

automotive vehicles & parts:   -0.31 percent        -0.15 percent         -0.19 percent

household appliances :             -0.31 percent       -0.16 percent          not available

aerospace products & parts:    +2.11 percent      +2.54 percent          not available

There continue to be shifts within this list. But what’s also important to note is that even though the metals tariffs have been broadened overall in scope, as countries such as Canada and Mexico had initially received exemptions, the metals-using sectors out-performed as job creators by roughly the same margins in September as in July.

The next major data set that will spotlight the metals-using sector’s performance will be the September industrial production data that the Federal Reserve will release on October 16. They may reveal a major turnabout in the metals-using industries’ fortunes. But unless they do, a heavy burden of proof will remain with the tariff opponents to come up with any serious reasons to think that the new levies are economic losers – or even close.

(What’s Left of) Our Economy: New Fed Figures Show Still More Solid Metals-Users Growth Despite Tariffs

Tags

aluminum, durable goods, Federal Reserve, industrial production, inflation-adjusted growth, manufacturing, metals, metals tariffs, metals-using industries, steel, tariffs, Trade, Trump, {What's Left of) Our Economy

Although the media remains far from catching on, with the release this morning of the Federal Reserve’s latest manufacturing production figures (for August), it should no longer be news to report that President Trump’s metals tariffs show absolutely no sign of harming U.S. industry overall or sectors that use significant amounts of steel and aluminum – where the levies have been imposed. The real metals tariff-related news will come if and when such damage actually does turn up in any official data.

Here’s how major metals-using industries have done in terms of generating real growth between July and August (according to this morning’s preliminary data) – along with the numbers for manufacturing as a whole, and durable goods as a whole (the super-category in which the heaviest metals users tend to be found):

overall manufacturing: +0.28 percent

durable goods:   +1.01 percent

fabricated metal products:  +0.22 percent

machinery:  +1.07 percent

automotive:  +4.02 percent

small appliances:  +0.81 percent

major appliances:  -2.76 percent

In general, the metals-using sectors have clearly performed quite well. Moreover, major appliance makers – the top exception – have of course, have been hit not only with the metals tariffs, but with safeguard tariffs on one of their products – large residential laundry machines.

But since a single month does not a trend make, let’s examine the inflation-adjusted output data since the advent of the first metals tariffs – in late March. Once again, the big takeaway is that the metals-using sectors in general have at least held their own. In fact, except for the major appliances category, their price-adjusted production has begun to accelerate.

                                                  old thru July   new thru July    new thru Aug

overall manufacturing                     +0.25                +0.26                 +0.54

durables manufacturing                    +0.48               -0.09                  +0.94

fabricated metals products               +0.79               +0.62                 +0.84

machinery                                        +0.09                +0.69                  +1.77

automotive                                        -0.63                -3.38                   +0.49

small appliances                               -5.33                -4.11                     -3.34

major appliances                              -5.25                -2.87                     -5.55

Finally, the metals tariffs now appear to be resulting in notable after-inflation production increases in the protected metals sectors, too. In August, constant dollar primary metals production grew on month by three percent – its best such performance since March, 2010 (3.43 percent), when the current economy-wide recovery was in its very early stages. In addition, since the first steel and aluminum tariffs went into effect, real primary metals production is up 1.15 percent – which compares very favorably with the output performance of manufacturing in general, the durable goods super-sector, and the metals-using industries.

In other words, rather than sitting on their hands and just enjoying the higher profits enabled by the tariffs, it seems that the steel and aluminum industries are indeed ramping up production. So in a world where trade-related news was reported accurately, reports on the new industrial production numbers would specify that the levies so far are a win-win for the economy – working as intended for the metals makers and leaving metals users unscathed. Let’s see if this winds up as an accurate description of this world. 

  

(What’s Left of) Our Economy: Still No Evidence of Noteworthy Inflation from Metals Tariffs

Tags

aluminum, inflation, Labor Department, metals tariffs, metals-using industries, PPI, Producer Price Index, steel, tariffs, Trade, Trump, {What's Left of) Our Economy

Another day, another set of U.S. government data showing that, so far, claims that President Trump’s metals tariffs are devastating steel- and aluminum-using industries and triggering virulent inflation have no basis in fact other than a few anecdotes.

The latest figures come from the Labor Department and they show changes in the nation’s producer prices – that is, inflation (or the lack thereof) in what businesses pay for the goods and services they buy in order to turn out their final products, as opposed to inflation in the prices that consumers pay for their own purchases.

Conveniently, the monthly Producer Price Index (PPI) release comes with tables that show in considerable detail exactly where and how much prices have changed since April – the first full month following the imposition of the first set of metals tariffs. So nothing could be easier than to look at this morning’s report and see that from May through August (the time period covered), prices of steel mill products have grown sequentially by 1.9 percent, 1.6 percent, and 2.6 percent, respectively. That’s higher than producer price increases for the economy as a whole. But the numbers don’t exactly scream “raging inflation.”

That goes double for aluminum mill products. After rising by 2.1 percent between May and June, they actually dropped in each of the next two months – by three and 2.1 percent, respectively.

As a result, it shouldn’t be the least bit surprising that there’s been no major producer price inflation for any of the metals-using industries tracked by the Labor Department during this period. Here are some representative numbers:

                                     May-June           June-July             July-August

metal containers          0.6 percent         0.4 percent             0.4 percent

hardware                     0.2 percent         0.5 percent             0.0 percent

fabricated structural    0.9 percent        -0.6 percent             0.2 percent

metal products

bolts, nuts, screws,     -0.5 percent         0.5 percent            0.6 percent

rivets, & washers

non-fluid power           0.2 percent        0.1 percent             0.3 percent 

metal valves 

ball & roller bearings   0.0 percent        0.2 percent             0.6 percent

machine shop              -0.1 percent        0.6 percent             0.0 percent   

  products 

motor vehicle parts     -0.1 percent        0.2 percent            -0.1 percent

The only evidence for a significant tariff impact comes from the year-on-year price changes. For aluminum mill products in August, it was 14 percent, for steel mill products 18.6 percent. These figures are not seasonally adjusted, unlike most of the above numbers, which are. But they’re very steep nonetheless. So is this the real evidence for the “devastating tariffs” argument?

No. And here’s why. A year ago, steel and aluminum products were being massively dumped into the U.S. market. That is, thanks to foreign government subsidies, they were artificially low, and by definition had little or nothing to do with free market forces. Naturally, metal-users liked this situation. But is this how we want the American economy to run? On the basis of addiction to foreign government decisions?

Moreover, the monthly numbers indicate some fading even of these price spikes.

As noted above, nothing could be easier than to look up these data – and report on them in news stories. But since other official numbers making clear that tariff fears so far have been nothing-burgers have been studiously ignored by the Mainstream Media, the case for optimism concerning producer prices looks less than convincing.

(What’s Left of) Our Economy: The New Jobs Report Shows that the Metal Tariffs Sky Keeps Not Falling

Tags

aluminum, core capex, Jobs, Labor Department, manufacturing, metals tariffs, metals-using industries, private sector, steel, tariffs, Trade, {What's Left of) Our Economy

This is getting just embarrassing. Economists and mainstream media reporters and pundits keep claiming that President Trump’s metals tariffs are already damaging the U.S. economy – and especially industries that heavily use the steel and aluminum that have become more expensive because of the levies on imports of those goods. (Here’s a new example.)

And the most authoritative data available keep demonstrating that these claims so far are absolute hokum. (See this RealityChek column for a summary and relevant links.) The latest evidence: this morning’s August jobs report from the Labor Department. It shows emphatically that those metals-using sectors have mainly created net new jobs at a faster pace than domestic manufacturing overall, and that several have boosted payrolls more rapidly than the entire private sector (including service industries that are not heavy metals users).

Here are the numbers showing the relevant rate of employment changes from April (the first full month in which the metals tariffs were in effect) through both July (where they stood as of the previous monthly jobs report) and through August:

                                                       thru July                        thru August

entire private sector:                 +0.53 percent                   +0.64 percent

overall manufacturing:              +0.73 percent                   +0.47 percent

durable goods:                          +0.96 percent                   +0.57 percent

fabricated metals products:      +1.10 percent                   +1.17 percent

non-electrical machinery:         +1.43 percent                   +1.04 percent

automotive vehicles & parts:    +1.06 percent                  -1.08 percent

household appliances (thru June): -0.63 percent           +0.16 percent (thru July)

aerospace products & parts (thru June): +1.05 percent  +2.03 percent (thru July)

 

There have been some shifts within this list. But with the exception of automotive, no metals-using sector has slacked off more than manufacturing as a whole, and three of these industries (fabricated metals products, appliances, and aerospace) have picked up the pace. And even the metals-using durable goods super-sector as a whole didn’t fade much more on the employment front than manufacturing overall.

In addition, yesterday’s official business investment numbers confirmed that, through July, new orders for core capital goods (such machinery and equipment minus demand for defense and the volatile numbers for aircraft) have now advanced sequentially for four straight months. Since “core capex” is rightly viewed as the economy’s best proxy for business’ confidence in its future prospects, these results stuck a new fork in the narrative that the Trump tariffs would vitiate such spending by boosting that predominant bugaboo of corporate planning – uncertainty.

The new jobs report did contain some disquieting news for domestic manufacturing. Payrolls fell on month in August (by 3,000) for the first time since July, 2017. And the revisions pretty much cut the previously reported impressive June and July gains in half. (The new July increase of 18,000 is still preliminary.)

But today’s employment release also made clear that, after several months of metals tariffs, the fears about their impact are no more than fears. Why is that not considered newsworthy?

(What’s Left of) Our Economy: The Tariff-Induced Carnage in U.S. Metals-Using Manufacturing is Still MIA

Tags

appliances, automotive, durable goods, fabricated metal products, Federal Reserve, industrial production, machinery, manufacturing, metals tariffs, metals-using industries, tariffs, Trade, Trump, washing machines, {What's Left of) Our Economy

The July figures for after-inflation U.S. manufacturing production came in this morning from the Federal Reserve, and they further debunk widespread reports that President Trump’s tariff-heavy trade policies – and particular his levies on steel and aluminum imports – are backfiring badly by decimating metals-using manufacturing sectors that dwarf the steel and aluminum makers.

Let’s first look at the monthly numbers, and compare the (preliminary) real growth of major metals-using sectors and manufacturing overall from June to July:

overall manufacturing:  +0.31 percent

durable goods:   +0.39 percent

fab metals:  -0.03 percent

machinery:  +0.56 percent

automotive:  +0.94 percent

small appliances:  -1.41 percent

major appliances:  -4.56 percent

Clearly, most metals-using sectors actually outperformed overall, with the top exceptions being appliance makers. Those in the major appliance category, of course, have been hit not only with the metals tariffs, but with safeguard tariffs on one of their actual products – large residential laundry machines.

Moreover, the output data since the advent of the first metals tariffs – in late March – show that the metals-using sectors in general have at least held their own. Here are the inflation-adjusted output percentage changes since April; they include the initially reported numbers through June (released by the Fed last month), and the revised June and initial July figures (released this morning).

                                                       old thru June   new thru June    new thru July

overall manufacturing                     – 0.21                +0.06                 +0.25

durables manufacturing                    -0.05               +0.09                  +0.48

fabricated metals products               +0.90               +0.82                 +0.79

machinery                                         -0.75                -0.47                  +0.09

automotive                                        -0.68                -1.56                   -0.63

small appliances                               -3.31                -3.98                   -5.33

major appliances                              -3.16                -0.73                    -5.25

Although the results for the very large machinery and automotive sectors look worse than the overall manufacturing numbers at first glance, they’ve each been undermined by some one-off developments.

In machinery, as reported here last month, the subpar post-April constant dollar growth clearly reflects some giveback from a big production jump between March and April. This increase was initially reported as a 2.27 percent surge, and it was estimated this morning at a still impressive 2.21 percent.

In automotive, production is still recovering from the effects of a fire in early May at a factory that produced parts for a popular Ford pickup truck, and which depressed after-inflation output that month by a huge 8.52 percent.

The post-April numbers confirm that both appliance sectors continue to be the big tariff losers, but the rest of the data show that they’ve been the exceptions, not the rule.

As usual with data, “past performance does not guarantee future results.” But the new Fed figures (along with comparable employment figures I’ve reported) also make clear that, so far, claims of major tariff-induced losses for domestic metals-using manufacturing belong in the realm of speculation, not of facts.