(What’s Left of) Our Economy: Manufacturing Job Growth Kept Slowing Last Month

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737 Max, aerospace, automotive, Boeing, CCP Virus, China, coronavirus, COVID 19, Department of Labor, Jobs, Joe Biden, machinery, manufacturing, medical equipment, non-farm employment, pharmaceuticals, PPE, private sector, stimulus package, tariffs, trade war, Trump, vaccines, Wuhan virus, {What's Left of) Our Economy

The manufacturing employment growth slowdown that began in early summer continued in November, according to the latest monthly U.S. jobs report released by the Labor Department this morning. Moreover, industry’s cumulative employment-creation rate of increase during the CCP Virus rebound period fell further behind that of the overall American private sector.

Domestic manufacturers added a net 27,000 workers to their payrolls in November – the weakest rise since August’s 30,000. As recently as June, such industrial jobs jumped by 333,000. Moreover, revisions were slightly negative. September’s monthly 60,000 gain was unchanged, but the October improvement was reduced from 38,000 to 33,000.

In a return to early rebound-period patterns, automotive employment dominated the November picture for manufacturing, as vehicle and parts makers accounted for well over half (15,400) of the sequential payrolls expansion.

Other job-creation winners for November included plastics and rubber products (4,600 of the total 5,000 job gains for the non-durable goods super-sector); furniture (3,100); and miscellaneous durable goods manufacturing (2,500 – this category includes much virus-related medical equipment, more on which below).

Monthly employment losses in manufacturing were small by sector, but widespread. The worst results were turned in by fabricated metals products (2,000), the big chemicals sector (1,900), primary metals (1,700), and apparel (1,500).

Somewhat encouragingly, the large bellwether machinery sector managed to add to its payrolls, but the increase was just 1,900, and the October rise was revised down from 3,900 to 3,000.

As of November, manufacturing had regained 764,000 (56.05 percent) of the 1.363 million jobs lost during the worst of the pandemic-induced downturn in March and April. Its employment drop during those months represented 10.61 percent of its payrolls level in February – the last pre-virus month.

That rate of improvement is still faster than that of the economy overall: Non-farm payrolls (the Labor Department’s U.S. employment universe) have recovered 12.326 million (55.62 percent) of their March and April losses.

But this economy-wide total was held back by the 99,000 public sector jobs lost in November, due overwhelmingly to the federal government’s release of 93,000 workers hired temporarily to help conduct the 2020 Census. At the same time, state and local government employment levels were little changed last month, and they could wind up implementing major job cuts unless Washington approves CCP Virus relief for them. So the cumulative manufacturing numbers may well continue looking better than the overall non-farm payrolls numbers for the next few months at least, but for all the wrong reasons.

And accordingly, as of November, the overall private sector has regained 12.670 million (59.79 percent) of the 21.191 million jobs it shed during the worst pandemic months.

The employment figures for the CCP Virus-related medical manufacturing categories only go through October, but given the scale of the pandemic and the demand for these products, their jobs gains have been surprisingly negligible since the worst of the virus-induced recession.

For example, the broad pharmaceuticals and medicines sector added only 100 workers on net in October, and has increased its payrolls by only 0.74 percent since February and 1.01 percent since April. It’s true that its job losses were minimal (0.26 percent in March and April). But the recent increases still look meager given the nation’s months-long health emergency.

Within this category, the sub-sector including vaccines hired 600 net new employees in October, bringing its jobs gains to 1.26 percent since February, and 3.42 percent since April – also reflecting modest job losses suffered in February and March. And of course, due to recent announcements of promising vaccines and the likelihood of huge production ramps, the employment picture here will bear close watching in the months ahead.

The employment performance of the manufacturing category containing PPE goods like face masks, gloves, and medical gowns has been stronger. In October, its payrolls expanded by 400, and they’re up 7.38 percent since February, and actually grew slightly during March and April, too.

Of course, numerous wild cards are likely to impact domestic industry’s job-creation record going forward. But their net effect is difficult to forecast now, for any number of reasons. How much bigger will the virus’ second wave become? Will pandemic relief be approved in Washington, and how big will any package be? Will economic growth continue whether such legislation is passed or not?

That vaccine sector doesn’t look big enough to affect overall manufacturing job totals. But resumed production of Boeing’s safety-troubled 737 Max model and of aerospace manufacturing generally due to an overall national and global recovery would be substantial. And finally, will apparent President-elect Joe Biden lift any of President Trump’s steep, sweeping China tariffs? With this many uncertainties still clouding the picture, it could be many months before a manufacturing New Normal emerges – and with it, the prospect of figuring out exactly how healthy or sickly domestic industry’s fundamentals really are.

(What’s Left of) Our Economy: For Now, the U.S. Manufacturing Jobs Picture is Normalizing

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automotive, Employment, government workers, Jobs, manufacturing, non-farm employment, non-farm jobs, non-farm payrolls, private sector, public sector, stimulus package, {What's Left of) Our Economy

The total U.S. economy and employment pictures sure aren’t anywhere close to normal, but this morning’s official jobs report (for August) looked awfully familiar to anyone who’d been following payrolls in manufacturing before the CCP Virus struck. And the noteworthy result:  Industry continues to be a jobs outperformer during this pandemic period.     

In contrast to the enormous, and largely automotive-driven swings of previous months, U.S.-based manufacturers added 29,000 net new jobs last month compared with July’s levels. Automotive payrolls shrank by only 5,300.

Moreover, as with the overall non-farm economy (the U.S. government’s definition of the American employment universe), revisions to recent manufacturing results were slightly negative. July’s initially reported 26,000 manufacturing employment increase was revised up to 41,000, but June’s previous estimate of 357,000 (itself revised up) is now judged to have been just 333,000.

This time around, domestic industry’s biggest sequential employment winners in absolute terms were food products (up 12,100), plastics and rubber products (up 6,500), and fabricated metal products (up 5,900). The biggest losers were transportation equipment (whose 8,400 loss includes the 5,300 combined figures for vehicles and parts), non-metallic mineral products (down 4,400), and printing (down 4,100).

In all, from February (the last full month before virus-related shutdowns began dramatically depressing national economic activity) through its April bottom, manufacturing payrolls fell by 1.363 million, or 10.61 percent). Since then, industry has regained 643,000 (or 47.18 percent) of those positions. As a result, manufacturing employment is now 5.60 percent lower than in February, before the virus arrived.

Underscoring manufacturing’s relative resilience during the pandemic-induced recession, between February and April, the American private sector shed 21.191 million workers – a drop of 16.34 percent. Since then, 10.473 million net jobs have been restored (nearly half – 49.42 percent– of the total lost). As a result, private sector employment is now 8.26 percent below those pre-CCP Virus February levels.

In addition, from February through April, total non-farm employment sank by 22.34 million, or 14.64 percent. Since then, a net of 10.611 million (or 47.50 percent) of these jobs have come back, leaing non-farm payrolls 7.57 percent short of their pre-pandemic totals.

But since non-farm payrolls include public sector jobs, this performance will surely weaken if the Democratic-Republican standoff in Washington over economic stimulus stays unresolved for much longer, since one of the main bones of contention is federal aid for state and local governments whose tax revenues have been decimated by the virus and lockdowns.

Further, public sector jobs losses (and the service cuts sure to accompany them) inevitably will bleed into the private sector, as government is an important customer of what the private goods and service companies provide – both in terms of procurement, and in terms of how much government workers and their households consume.

Consequently, without a stimulus agreement, as unsatisfactory as this latest U.S. jobs report was, it might wind up being fondly remembered – including by manufacturers.

(What’s Left of) Our Economy: The Rest of the Story on August’s Manufacturing Jobs Figures

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Jobs, Labor Department, manufacturing, non-farm employment, private sector, real wages, wages, {What's Left of) Our Economy

Although the continued strong job growth in most metals-using industries since the Trump tariffs was the most important takeaway from Friday’s latest monthly official U.S. jobs report (for August), it certainly wasn’t the only important manufacturing employment news. So here are some of the other highlights (or lowlights) of the Labor Department release worth noting.

As I wrote Friday, the 3,000 sequential drop in manufacturing’s payrolls in August was the sector’s first monthly dip since July, 2017. And worse, the revisions (which were weak for the entire economy as well), cut the estimates of July and August net jobs gains nearly in half.

As a result, whereas July’s year-on-year manufacturing jobs increase was previously pegged at 327,000, the newest estimate (which is still preliminary) is only 296,000. Yet it’s still the best such advance since May, 1995 (297,000), which ain’t beanbag. Less impressive, though, the August annual increase (which is also preliminary) was lower still (254,000). On the other hand, it still represented a major pickup from between the two previous Augusts (116,000).

The August monthly slip and the downward revisions also slowed manufacturing’s progress in accounting for a growing share of overall non-farm employment (the Labor Department’s U.S. jobs universe).

As of the July jobs report, this share had risen to 8.55 percent – a decided improvement from the 8.47 percent figure from July, 2017. But now the July, 2018 number has been downgraded to 8.53 percent, and August’s dropped to 8.52 percent. As a result, although manufacturing employment has still been growing faster than overall American employment during the Trump administration (in February, 2017 – the President’s first full month in office, it stood at 8.49 percent of non-farm jobs), the degree of out-performance is less than previously judged.

Over the longer term, manufacturing’s status as an employment laggard is much clearer. Since it hit its latest bottom, in February and March, 2010, domestic industry has regained 1.264 million (55.12 percent) of the 2.293 million net new jobs it had lost during the Great Recession and its aftermath. All the same, its payrolls are still 7.49 percent below where they were when the recession officially began, at the end of 2007.

By contrast, the private sector overall lost 8.785 million jobs from the recession’s onset through its employment bottom in February, 2010. Since then, employment has grown by 19.689 million. And there are now 9.40 percent more private sector jobs than there were at the end of 2007.

But although the August jobs report altered the recent manufacturing jobs story somewhat, the discouraging manufacturing wages story remained fully intact. On a sequential basis, pre-inflation wages for the overall private sector increased by 0.37 percent, versus 0.22 percent for manufacturing workers. And on an annual basis, such current dollar private sector pay rose 2.92 percent for the private sector (its best such performance since May, 2009), but only a 1.80 percent improvement for manufacturing workers (the best such performance since January).

In fact, since the current economic recovery began in mid-2009, pre-inflation manufacturing wages are up 17.64 percent. For the private sector overall, they’ve risen by 22.67 percent.

In inflation-adjusted terms, manufacturing’s wages performance during the recovery is even worse. The latest data go up only through July, but they show that, since mid-2009, real private sector wages have risen by 4.46 percent. The increase for manufacturing workers has been only 0.28 percent – less than one-fifteenth as fast.

Yet as suggested by these meager price-adjusted improvements, both the private sector overall and manufacturing have turned in dismal wage performances. In fact, both remain in real wage recessions – i.e., stretches of two straight quarters or more where hourly pay has declined on net. For the entire private sector, after-inflation wages are down by 0.09 percent since July, 2017. For manufacturing, they’re off by 0.19 percent since January, 2016.

(What’s Left of) Our Economy: New Employment Report Sustains the U.S. “Manufacturing Jobs Strong but Wages Weak” Narrative

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Employment, inflation-adjusted wages, Jobs, manufacturing, non-farm employment, recovery, wages, {What's Left of) Our Economy

The major U.S. manufacturing jobs trends ended 2017 intact. Employment rose month-to-month in December by a solid 25,000 and the year-on-year gain of 196,000 was the best since the matching total of February, 2015. Moreover, at 8.51 percent, manufacturing’s share of total non-farm jobs kept inching up, and hit its best level since September, 2016 (which was fractionally higher).

Pre-inflation manufacturing wages rose by 0.11 percent on month in December after a 0.15 percent November decrease, but the yearly improvement of 1.56 percent was less than half that between the previous Decembers (3.21 percent). Moreover, progress in both measures lagged the private sector, and since the current recovery began, private sector paychecks have now outgrown those in manufacturing by 25.50 percent in current dollars – a gap considerably wider than last December’s 20.58 percent.

The technical recession in automotive job creation extended into its twentieth month in December, with employment levels down by 2,400 since April, 2016. But the December monthly employment increase of 1,300 was its second straight monthly gain.

Here’s my analysis of the latest monthly (December) manufacturing figures contained in this morning’s employment report from the Bureau of Labor Statistics:

>December’s non-farm payrolls report showed that both major trends recently shaping the U.S. Manufacturing employment scene remained fully intact as 2017 closed.

>Solid monthly job gains increased, with employment rising by 25,000. And the October sequential gains of 23,000 and 31,000, respectively, remained unrevised.

>Moreover, December’s yearly 196,000 manufacturing jobs increase was the best annual total since the same performance in February, 2015.

>Between the previous Decembers, industry’s payrolls fell by 16,000.

>In fact, manufacturing employment has been growing faster than overall non-farm employment (the Bureau of Labor Statistics’ U.S. jobs universe) since September, 2016, as in December, its 8.51 percent share of total non-farm employment was the highest since that month’s fractionally better share.

>Manufacturing wages, however, are still presenting a contrasting picture. They did rise month-to-month by 0.l1 percent before adjusting for inflation following a 0.15 percent November drop. But as often the case this year, this advance trailed the overall private sector’s 0.34 percent.

>On an annual basis, manufacturing’s 1.56 percent current dollar wage increase lagged both the overall private sector’s 2.50 percent, and the 3.21 percent gain industry recorded between the previous Decembers.

>Consequently, since the current economic recovery began in mid-2009, private sector wages before inflation have risen 25.50 percent faster than manufacturing wages. As of last December,, the gap was 20.58 percent.

>The December increase drove the number of net new manufacturing jobs created since the sector’s February and March, 2010 lows to 1.086 million – or 47.36 percent of the 2.293 million net job nosedive manufacturing suffered from the late-2007 start of the recession through that aforementioned employment bottom.

>But the overall private sector’s longer-term jobs performance has been much better. Since its February, 2010 jobs bottom, employers in this sector have boosted their payrolls by a net 17.782 million – more than twice the 8.780 million net positions lost during the recession and its aftermath.

>In addition, manufacturing employment remains 8.78 percent (or 1.207 million jobs) lower than when that recession began at the end of 2007.

>During the same period, private sector employment is up has grown by 7.76 percent (or 9.002 million jobs).

>Another problem with manufacturing employment continues to be a medium-term slowdown in the automotive sector. Indeed, the vehicle and parts industry has now been stuck in a technical jobs recession (a two quarter of more period of cumulative net decline) that entered its twentieth month in December.

>Although last month’s automotive employment rose sequentially in December for the second straight months (by 1,300), it’s down by 2,400 since April, 2016.

>Even more sobering than the pre-inflation manufacturing wage data are the price-adjusted figures – which have been in technical recession (down by 0.09 percent) since March, 2016.

>The latest numbers are from November, but they fell on month by 0.55 percent, and year-on-year were down 0.37 percent. From November, 2015 to November, 2016, real manufacturing wages rose by 1.21 percent.

>The private sector’s performance has been better, but by no means good. These inflation-adjusted wages are in technical recession, too, having fallen by a cumulative 0.28 percent since May.

>In November, they decreased by 0.28 percent on month and were only 0.19 percent higher than in the previous November.

>From November, 2015 to November, 2016, real private sector wages increased by 0.94 percent .

>As a result, during the current recovery – which is now more than eight years old – real private sector wages are up by 3.98 percent. Slow as that rate of increase is, it’s nearly six times faster than the 0.65 percent increase in after-inflation manufacturing wages.

(What’s Left of) Our Economy: So Productivity is the Main Manufacturing Jobs Killer?

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Employment, Jobs, labor productivity, manufacturing, non-farm business, non-farm employment, productivity, Trade, Trump, {What's Left of) Our Economy

If you’ve been following the increasingly loud national debate on U.S. trade policy that’s been supercharged by President Trump’s election, you’ll be really surprised by the results of this morning’s latest report from the U.S. Labor Department on America’s labor productivity. And if you haven’t been following the debate, you should be – as both trade policy generally and the productivity angle are really important for the nation’s future prosperity.

The big surprise (which has actually been unfolding for years now): On the one hand, folks who support current trade policies (meaning nearly the entire political, business, and media establishments in this country) insist that the president is wrong to blame these policies for the steep manufacturing job drop the nation has experienced for so long. Instead, they argue, productivity growth is the real culprit – manufacturers are using technology and better management to produce more and more goods with fewer and fewer workers. (Do I really need to provide links?) And complaining about technological progress and managerial improvements makes little sense – at best.

On the other hand, labor productivity – a relatively narrow but still crucial measure of efficiency, which is widely regarded as the prime long-term driver of American living standards – has been growing ever slower for many years now, even as manufacturing employment has tanked. The relationship certainly doesn’t track exactly over the short-term. But long-term, it strongly indicates that something other than better productivity has hammered the manufacturing labor market.

For example, during the 1990s economic expansion, when manufacturing employment dipped by only 0.38 percent, manufacturing labor productivity rose by 46.78 percent. (We’re going to compare expansions because that method yields the best – i.e., apples-to-apples – data.) During the shorter 2000s expansion, many more manufacturing jobs were lost – 12.44 percent of the nation’s remaining total. But the sector’s labor productivity improved by only a little less – 41.08 percent.

During the current economic expansion, which is still more than two years shorter than its 1990s predecessor but nearly two years longer than the 2000s expansion, manufacturing employment has actually risen by 4.68 percent. But industry’s labor productivity is up by just 22.88 percent. That’s less than half the rate of the 1990s expansion, which saw hardly any manufacturing job loss.

As for the latest manufacturing labor productivity figures – during a period when manufacturing employment has resumed falling – they’ve been miserable. In the second quarter of last year, it fell sequentially by 0.50 percent on an annualized basis. In the third quarter, it inched back up 0.04 percent. Finally, as reported this morning, manufacturing productivity increased by 0.72 percent.

In the rest of the economy (technically the non-farm business sector, according to the Labor Department), labor productivity has risen faster over the short run. After declining sequentially by an annualized 0.15 percent in the second quarter of last year, it rebounded by 3.49 percent in the third. Even better, that number was revised significantly upward – from 3.03 percent.

Yet that third quarter jump could well be an anomaly. Today’s preliminary fourth quarter figure was down to a 1.29 percent annualized gain, and during the current economic recovery, overall labor productivity has advanced by only 7.96 percent. The comparable numbers for the previous two recoveries? 23.01 percent and 16.07 percent, respectively.

Nothing has been heard from President Trump about the productivity growth slowdown, but he has certainly expressed alarm about the state of domestic manufacturing – historically, the American economy’s productivity growth leader. Because productivity growth is so central to national economic success, he’ll need to focus even more intently and precisely on such issues if he wants his presidency to go down as an historical winner.

(What’s Left of) Our Economy: Latest Manufacturing Jobs Recession Marks Second Birthday

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Bureau of Labor Statistics, inflation adjusted wages, Jobs, manufacturing, non-farm employment, recession, recovery, wages, {What's Left of) Our Economy

American domestic manufacturing employment fell sequentially by another 4,000 in November, extending its jobs recession to two years. Industry’s employment is now down on net by 12,000 since November, 2014, as its worst jobs slump since the Great Recession continued. Largely as a result, manufacturing’s share of total U.S. non-farm employment sank to another record low – just short of 8.45 percent. Moreover, in a break with the recent trend, manufacturing’s current dollar wages took their biggest sequential fall (0.61 percent) since November, 2011 (0.71 percent).

Manufacturing’s November job loss represented the seventh sequential drop this year, and the sector’s year-on-year losses (54,000) were the greatest since August, 2010 (73,000). September and October monthly employment revisions were slightly positive (11,000 total).

Here’s my analysis of the latest monthly (November) manufacturing figures contained in this morning’s employment report from the Bureau of Labor Statistics:

>American domestic manufacturing’s monthly November jobs loss of 4,000 extended industry’s employment recession to two years – it’s worst stretch for payrolls since the Great Recession.

>Thanks to the sector’s seventh monthly net jobs decline this year, manufacturing’s employment is now down by 12,000 since November, 2014.

>Despite positive revisions (11,000) for September and October, the November employment decline pushed manufacturing’s share of total U.S. employment down to another record low – just under 8.45 percent.

>Contrary to a recent pattern, however, November’s manufacturing job loss was accompanied by a sharp drop in nominal wages. Hourly pay in the sector fell by 0.61 percent from October levels – the worst such decline since November, 2011’s 0.71 percent.

>Pre-inflation wages for the private sector as a whole decreased by only 0.12 percent on month in November.

>November’s losses also drove manufacturing’s year-on-year employment loss down to 54,000 – the largest such decline since August, 2010’s 73,000.

>Between November, 2014 and November, 2015, manufacturing gained 42,000 jobs.

>Part of manufacturing’s big monthly wages drop might have stemmed from the sharp upward revision in October’s monthly advance – from 0.38 percent to 0.61 percent. That was the best such performance since August, 2015’s 0.63 percent.

>Due to the November monthly wage decline, hourly current dollar manufacturing pay advanced by 2.66 percent year-on-year. That’s better than the 2.33 percent recorded between the previous Novembers, but the lowest yearly advance in 2016 since March’s 2.55 percent.

>Since its 2010 employment bottom, manufacturing has regained 807,000 (35.19 percent) of the 2.293 million jobs it lost during the recession and its aftermath. By contrast, the private sector overall lost 8.801 million jobs from the recession’s December, 2007 onset through its February, 2010 absolute employment low. Since then, it has increased net employment by 15.626 million.

>In fact, whereas total private sector employment is now 5.90 percent higher than at the recession’s beginning, manufacturing employment is still 10.81 percent lower.

>Despite strong relative recent performance, since the recovery’ June, 2009 onset, manufacturing’s pre-inflation wage gains still trail those of the private sector as a whole by 16.94 percent to 13.77 percent.

>Examining manufacturing’s inflation-adjusted wages reveals a more complicated picture than depicted by the pre-inflation wage numbers. The latest Labor Department figures are from October, and show that manufacturing’s month-on-month performance (real wages rose 0.28 percent) handily beat that of the private sector (up 0.09 percent).

>Year-on-year, manufacturing’s October real wage increase also easily topped that of the private sector – by 1.78 percent to 1.23 percent.

>Yet since the recovery began in mid-2009 – nearly seven years ago – inflation-adjusted manufacturing wages have risen only 1.59 percent. Real private sector wages have increased considerably faster – by 3.98 percent.