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appliances, artificial intelligence, automation, Biden adminisration, chemicals, electric vehicles, electrical equipment, Employment, Federal Reserve, furniture, green manufacturng, interest rates, Jobs, Labor Department, manufacturing, NFP, non-farm payrolls, paper, printing, semiconductors, tariffs, transportation equipment, {What's Left of) Our Economy
Domestic manufacturing employment started out the new year on an encouraging note, with the Labor Department’s monthly jobs release reporting that industry added 23,000 positions sequentially. In fact, not only was this total the best since October, 2022’s 31,000. It was higher than the entire manufacturing jobs increase for 2023 (22,000).
Revisions were positive, too, with December’s gain upgraded from 6,000 to 8,000, and that annual 2023 figure nearly doubled from the initially reported 12,000.
As a result, the new report shows that manufacturing employment in January of 12.979 million is the highest absolute level since November, 2008’s 13.034 million.
But as a share of total non-farm payrolls (NFP, the U.S. government’s definition of the national employment universe), manufacturing jobs represented just 8.23 percent in January, and their share of private sector employment was 9.4 percent. In November, 2008, the manufacturing share of total NFP was 9.62 percent, and of total private sector employment 11.54 percent.
Incidentally, however, these comparisons point to an awfully interesting, largely overlooked conclusion: The fact that manufacturing’s share of total private sector employment has dipped so modestly over the past 15 or so years, and so much greater as a share of total NFP, indicates how greatly public sector job totals have swelled during this period.
January’s biggest monthly manufacturing jobs winners among the broadest Labor Department groupings below the two super-categories of durable and non-durable goods were:
>chemicals, where payrolls grew by 6,900 –their best performance ever (at least going back to their official data series beginning in 1990);
>transportation equipment, which saw an employment increase of 5,600; and
>printing and related support activities, whose 5,100 advance was its highest sequential jump since the 19,500 burst recorded in May, 2020, during the economy’s snapback from the short but deep CCP Virus-induced recession.
January’s biggest monthly manufacturing jobs losers were:
>Furniture and related products, which shed positions for the seventh straight month and whose 2,900 job cuts were its worst performance since last May’s 6,400;
>electrical equipment, appliance, and components manufacturing, where payrolls dropped by 2,600 for these sectors’ largest setback since last June’s 3,500; and
>paper manufacturing, where employment’s 1,800 sequential decline was the largest since September’s 2,200.
At this point, the reasons for optimism about manufacturing employment seem to outweigh strongly those for concern, much less outright pessimism. Chiefly, a major factory building boom has already been ignited by the overall economy’s continued strong growth, by the huge sums approved in Washington, D.C. for new domestic investment in sectors like semiconductors and green energy products, and by the Buy America-type strings attached to these measures.
Obviously, not all of these new projects will pan out. Yet even if the federal government’s batting average is just half decent, the new plants will keep spurring demand for manufactured inputs (construction materials, machinery, etc.) and soon begin cranking out large quantities of both intermediate goods that other manufacturers at home and abroad will be buying, as well as final products for consumers.
And don’t forget that the hundreds of billions worth of tariffs first imposed by former President Donald Trump and overwhelmingly kept in place by President Biden keep shielding American industries from predatory foreign trade practices.
The spreading use by manufacturers of artificial intelligence and other forms of advanced automation will restrain employment increases (though surely not greatly in the short term at least). So will some of the distinctive features of the green products (like the smaller number of parts used – and therefore workers needed – by electric vehicles versus the conventionally powered).
Moreover, if inflation heats up again, the Federal Reserve could keep interest rates high for even longer, as Chairman Jerome Powell has put it, thereby crimping the supply of private capital. And of course, many of the pandemic-era stimulus programs will be running out this year, thereby crimping consumer demand.
But right now, I’m skeptical that any of these actual and potential obstacles will prove big enough to darken the manufacturing outlook any time soon. What say you readers?