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

Tags

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

Tags

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?

Tags

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

Tags

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.