(What’s Left of) Our Economy: October Costs Manufacturing Some Jobs Momentum

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(What's Left of) Our Economy, automotive, CCP Virus, coronavirus, COVID 19, election 2020, Employment, fabricated metal products, food products, Jobs, Joe Biden, machinery, manufacturing, metals, motor vehicle parts, NFP, non-farm jobs, non-farm payrolls, private sector jobs, recession, regulation, tariffs, taxes, Trade, transportation equipment, Trump, Wuhan virus

The manufacturing jobs picture revealed in this morning’s October official U.S. jobs report was a classic glass-half-empty/half-full story. But for the first time since the employment rebound from its CCP Virus-induced lows, the gloomier view seems to have the edge – though a modest one. The main reason: In October, the rate of cumulative manufacturing job creation fell slightly behind that of the U.S. government’s entire employment universe (so-called non-farm payrolls, or NFP), and of the private sector.

Domestic industry increased its employment level on net by 38,000 in October on a sequential basis. That figure represented a decrease from the September total – which has been revised down from 66,000 to 60,000. But it’s an improvement over August’s also downwardly revised 30,000 total.

In addition, as opposed to dominating the manufacturing jobs picture for good and ill, as it has during the pandemic recovery period, automotive jobs, rose by a mere 1,400. The downward revision in combined vehicle and parts payrolls in September, however (from 14,300 to 7,700) did account for more than all of the total downward manufacturing revision for the month.

October’s manufacturing net jobs-creation leaders were fabricated metals products (7,200), food manufacturing (6,200), primary metals (6,000), and machinery (3,900). The first two categories enjoyed their second straight month of relatively strong job improvement, while the primary metals gain amounted to an important turnaround from September’s 3,400 net employment loss.

At the same time the October machinery results – important because that sector influences so much manufacturing activity overall, and because of its close connections to non-manufacturing industries like agriculture and construction) – were much less impressive than the 12,600 employment rise of September. Worse, this figure itself was downgraded from the initially reported 13,800.

The only significant October jobs loser in manufacturing was transportation equipment. This large category – which includes automotive – shed 2,400 jobs on net. The big problem here was motor vehicle parts, where employment fell by 2,800.

October’s employment progress means that manufacturing overall has regained 742,000 (54.44 percent) of the 1.363 million jobs it lost during the worst of the CCP Virus economic slump of March and April. (Those earlier job losses represented 10.61 percent of the last pre-virus – February – manufacturing employment level.)

As of October, non-farm payrolls total had regained 12.070 million (54.47 percent) of the 22.160 million total decrease they suffered in March and April. So although by this definition, overall U.S. employment plunged by 14.53 percent during the virus low point – more proportionately than manufacturing) — the rate of its jobs rebound is now slightly faster.

Faster still has been the bounceback in private sector jobs. Non-government employment (whose status is much more revealing of the economy’s fundamentals than government employment) fell by 21.191 million in March and April combined – greater relative losses (16.34 percent) than experienced either by manufacturing or the non-farm sector. But its strong October performance mean that it’s regained 12.317 million of these position on net – an increase of 58.12 percent.

But as if the CCP Virus and its decimation of the economy haven’t created enough uncertainties for manufacturing employment (and for the economy as a whole), this week’s Election 2020 results could further muddy the waters – especially if the White House changes hands. Despite October’s jobs slowdown, industry’s employment and output have held up well, due no doubt significantly to President Trump’s tariff-centric trade policies and domestic overhauls in taxes and regulations. The Trump manufacturing record pre-virus has also been strong. Would a Biden administration reversal of these moves put U.S. manufacturing back behind the eight-ball? Or would it find new alternative growth fuels for industry?

(What’s Left of) Our Economy: The New U.S. Jobs Report Underscores Manufacturing’s Resilience – & Possibly Tariffs’ Value

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automotive, China, Jobs, machinery, manufacturing, manufacturing jobs, non-farm jobs, non-farm payrolls, private sector jobs, tariffs, Trade, Trump

The headline figure for today’s September U.S. jobs report might have been lousy, but America’s manufacturers delivered excellent results, continuing a show of resilience that’s lasted throughout the CCP Virus era, and that could be closely connected with President Trump’s tariff-heavy trade policies.

Industry added 66,000 net new jobs from month to month – its best totally since June (now confirmed for the time being at a 333,000 gain. And revisions overall were positive.

August’s previously reported manufacturing jobs increase of 29,000 is now estimated to have been 36,000. And July’s results held at 41,000.

Moreover, although the automotive sector’s payroll improvements once more dominated the manufacturing results, the dominance was, as with the data since June, much less pronounced than during the spring. Combined vehicle and parts payrolls rose by 14,300.

Another encouraging development – the broad machinery sector, which is so closely connected with other segments of manufacturing as well as with much of the non-manufacturing economy (e.g., construction and agriculture) – added 13,800 new jobs on net. That’s a major acceleration from previous months’ results.

The other significant manufacturing monthly jobs winners in September included non-metallic mineral products (+6,200), the continually strong food products sector (+5,000), printing and related activities (+4,700), and fabricated metals products (4,200).

By far the the worst September sequential manufacturing jobs performance came in primary metals (-3,400), followed by the huge chemicals sector (-2,000).

September’s advances mean that manufacturing has now regained 716,000 (52.53 percent) of the 1.363 million jobs it lost in March and April, as the CCP Virus was peaking. (Those earlier job losses represented 10.61 percent of the last pre-virus – February – manufacturing employment level.)

The total decrease in nonfarm payrolls (NFP – the U.S. government’s definition of the nation’s jobs universe) in March and April was 22.16 milion – 14.53 percent of the February total and thus a steeper drop than suffered in manufacturing. Since then, 11.417 million, or 51.52 percent, of those jobs have been recovered.

As for private sector employment (which, unlike non-farm jobs, omits public sector employement, which is affected far more by government decisions rather than economic fundamentals), its levels fell by 21.191 million, or 16.34 percent , during the worst of the pandemic. Since April, 11.39 million, or 53.75 percent, of these jobs have been regained.

Given U.S. manufacturing’s extensive exposure to foreign competition, this relative strength is difficult to imagine absent Mr. Trump’s tariffs, especially the high levies remaining on most imports of goods from China. Without the tariffs, it’s easy to imagine a much greater flood of Chinese manufactures into the U.S. market once the People’s Republic and its factories emerged from their own pandemic shutdown, and depressing demand for domestic U.S. produced manufactures – as well as for the employees that make them.

(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.

Im-Politic: On the Economy, Obama’s Record Looks Stronger than Trump’s

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Barack Obama, CCP Virus, coronavirus, COVID 19, election 2020, Employment to Population Ratio, GDP, gross domestic product, Im-Politic, Jobs, Joe Biden, Labor Force Participation Rate, labor productivity, manufacturing, non-farm jobs, private sector, productivity, real GDP, real private sector, real wages, recession, subsidized private sector, Trump, value added, wages, Wuhan virus

Not surprisingly, as this U.S. presidential cycle gets ever more intense, so has the debate over which boasts a better record in helping steer the nation’s economy: the Obama administration in which Democratic presidential nominee Joe Biden served as second-in-command, or the incumbent Trump administration. I’ve just looked over some key data, and the verdict on most counts goes to the Obama administration. The margin of victory here isn’t huge, but it’s anything but razor thin, either. Moreover, any Obama edge is surprising given that the economy is President Trump’s major advantage in nearly all the polls.

All the same, here are the data. They compare performance during the last three full years of the Obama presidency and the first three full years of the Trump presidency. In my view, these time-frames deserve priority because they’re the ones closest to each other in the same expansionary business cycle, making apples to apples results much likelier.

The time-frames of course leave out the CCP Virus period, during which all the Trump numbers sank like stones. But if you regard the virus’ economic effects as purely artificial, having nothing to do with the economy’s fundamentals (as I do), then you want to strip them out.

Other methodological notes: Although the jobs-focused data come out from the federal government on a monthly basis, and therefore permit comparisons between completely identical (and virus-adjusted) three-year periods, the economic growth and productivity data don’t, so I show Trump results both through the first quarter of this year (affected by the shutdowns that began in March) and through the last quarter of 2019. In addition, regarding the monthly figures, because of the January 20 inauguration date, I peg the end of the Obama administration as January, 2017 and the beginning of the Trump administration as February, 2017.

And off we go, starting with overall employment, which consists of the Bureau of Labor Department’s U.S. employment universe – “non-farm jobs.”

Obama: +5.55 percent            Trump: +4.56 percent

But of course, non-farm jobs include all government jobs, and their status has much less to do with the economy’s underlying strengths and weaknesses than with politicians’ decision. So here are the numbers for private sector jobs.

Obama: +6.56 percent            Trump: +5.04 percent

So advantage Obama again. As RealityChek regulars know, however, not all private sector jobs are created equal. In fact, many barely deserve the term at all, because their circumstances depend so heavily on government spending. Healthcare is of course the leading example. Therefore, it’s useful to examine the employment results in what I’ve called the “real private sector”.

Obama +6.22 percent             Trump: + 4.63 percent

It’s another Obama out-performance. This string is broken when it comes to manufacturing jobs, however.

Obama: +2.38 percent           Trump: +3.78 percent

But Obama comes out ahead on inflation-adjusted wages for the entire private sector.

Obama +3.69 percent           Trump: +2.99 percent

And the margin is even bigger for real manufacturing wages.

Obama: +3.15 percent          Trump: +0.74 percent

One problem with looking at jobs gains or losses, or even the unemployment rate, is that these numbers don’t tell the whole story about the health of the labor market. To fill in the gaps, economists like to examine two performance measures called the Labor Force Participation Rate, and the Employment to Population Ratio.

The former, according to well regarded left-of-center economics think tank, reveals “the number of people in the labor force—defined as the sum of employed and unemployed persons—as a share of the total working-age population, which is the number of civilian, non-institutionalized people, age 16 and over.”

The latter, the same source explains, shows “the number of people currently employed as a share of the total working-age population, which is the number of civilian, non-institutionalized persons, age 16 and over.”

For what it’s worth, this reliable economics and finance website claims that the Employment to Population Ratio provides the best indication of job shrinkage or growth. So let’s begin there.

Obama: 58.8 percent to 59.9 percent       Trump: 59.9 percent to 61.1 percent

Pretty much a standoff.

As for Labor Force Participation:

Obama: 62.9 percent to 62.6 percent       Trump: 62.8 percent to 63.4 percent

Advantage, Mr. Trump.

As previously mentioned, the economic growth figures are only reported quarterly. Keeping that in mind, here’s how the two administrations stack up. The most commonly followed measure of the economy’s size and how it changes is inflation-adjusted gross domestic product (GDP).

Obama: +8.19 percent           Trump: +5.75 percent

These data, though, include shutdown-y March, 2020. Taking the story only through the end of 2019 brings the Trump years’ performance up to 7.11 percent – but he still trails.

Interestingly, even including the first quarter of this CCP Virus-y year, Mr. Trump’s record is slightly better when another metric for economic growth is used – value-added. Its value lies in trying to eliminate the double- and even more overcounting that results when the of the parts and other inputs of a complicated product are counted both when they’re turned out individually, and when they’re contained in that final product.

Obama: +12.09 percent          Trump: +12.24 percent

The Trump presidency’s margin is even bigger in manufacturing value-added, and even including the first quarter:

Obama: +7.09 percent            Trump: +10.58 percent

Importantly, all the above value-added numbers are pre-inflation. After-inflation value-added data are tracked by the federal government, too, but they’re not even measured on a quarterly basis. Only full-year numbers are available. So since these make precise comparisons less possible, I’m skipping them.

Finally, here are numbers that hardly ever make the news, but might be the most important of all – the productivity data. These various measures of efficiency are widely viewed by economists are crucial to determining how healthy and durable economic growth is and will be, and therefore how strongly and for how long living standards can rise.

Results aren’t up-to-date enough for the broadest measure of economic efficiency – multi-factor productivity. But they are for the narrower measure, labor productivity – which gauges how much a single worker can produce in a single hour on the job – starting with the overall economy

Obama: +3.97 percent           Trump: +3.95 percent

And if you want to remove the first quarter of this year, because of the virus effect in March, overall labor productivity during the Trump period was up 4.02 percent

Labor productivity is monitored for manufacturing, too, and here are those statistics including the first quarter of this year:

Obama: -2.57 percent           Trump: +0.29 percent .

Oddly, if the first quarter is removed, the Trump years’ performance worsens a bit – and even falls to an overall dip of 0.09 percent. But however poor, it still tops the record of the Obama years.

So why are the Trump economy poll numbers so good? One possible answer: The final year of the Obama presidency was feeble by nearly all measures. Real gross domestic product advanced by only 1.70 percent. Total employment grew by a mere 1.64 percent, versuss 2.19 percent in 2014. National manufacturing employment actually dipped by 6,000 from 2015 levels. Real wage growth overall slowed from 1.26 percent in 2014 to 0.56 percent in 2016. And inflation-adjusted manufacturing wages performed scarcely better.

Moreover, as the New York Times article linked above makes clear, the public’s evaluations of the Trump economic record are incredibly partisan – often conflicting with a respondent’s actual situation.

It’s also possible and legitimate, as I’ve noted, to point to some important reasons for this Trump under-performance.  The President’s trade policies clearly disrupted national and global supply chains, and the consequent inefficiencies surely dragged on GDP and employment in the short term.  Boeing aircraft’s safety woes have undercut national economic performance lately, too.  But good luck to you if you think these considerations are going to have any effect on voters.  

I’m hardly naive enough to think that these or other economic facts will be enough to determine November’s outcome. And I have no idea how voters will factor in the deep CCP Virus-induced recession into their thinking. But the facts aren’t a throwaway, either, and although the Obama record didn’t exactly thump Mr. Trump’s, it’ll certainly provide Biden with considerable ammunition.

(What’s Left of) Our Economy: U.S. Manufacturing’s Jobs Recovery Continues Strongly

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automotive, CCP Virus, coronavirus, COVID 19, exports, Jobs, manufacturing, NFP, non-farm jobs, non-farm payrolls, private sector, services, Trade, Wuhan virus, {What's Left of) Our Economy

The big question raised by today’s second straight expectations-clobbering official monthly U.S. jobs report (for June) is whether the surge in recovered employment can withstand whatever second CCP Virus wave of infections, or resurgence of the first wave, numerous states have been seeing lately.

I can’t answer that knowledgeably – and I suspect few others can, either. What I can do is note that the June numbers roughly repeat or confirm some of the patterns visible for May. Mainly, manufacturing held up better than the rest of the American jobs market, and within manufacturing, the swings have been dominated by the automotive sector.

Domestic industry added a net 356,000 workers to its payrolls in June, and revisions for the last two months – as with non-farm jobs as a whole (the U.S. government’s jobs universe) – were slightly positive (virtually unchanged at a 1.32 million net loss for April, upgraded from a 225,000 to a 250,000 net gain in May).

Fully 55 percent (195,800) of those 356,000 new June manufacturing jobs came in the automotive sector – a rubber band-like comeback surely reflecting the outsized hit this industry has taken since the CCP Virus threw the entire economy into a deep downturn. Even with this improvement, since February, combined vehicle and parts employment is down more than twice as much relatively speaking (12.11 percent) as overall manufacturing employment (5.89 percent).

Further, overall manufacturing’s record of pandemic-era resilience continued in June. Its monthly jobs growth was only 3.03 percent – slower than the rate for the total non-farm sector (3.61 percent) and the private sector (4.27 percent).

But a main reason is that manufacturing has taken a much smaller CCP Virus hit than the rest of the economy. That 5.89 percent employment loss since February has been considerably less than that of the non-farm sector (9.62 percent) or the private sector (10.17 percent).

Manufacturing employment could face some intriguing crosswinds in the months ahead. A second virus wave or a re-strengthening first wave may well slow its jobs rebound going forward, since U.S.-based industry sells so much to those domestic service industries that have borne the brunt of the pandemic-created economic damage. At the same time, domestic manufacturers were selling just under 18 percent of their gross output overseas as of the end of last year, so if recoveries quicken overseas, U.S.-based manufacturers and their workers could benefit significantly.

In this vein, one possibly hopeful sign is that as of May, according to this morning’s monthly U.S. trade report from the Census Bureau, manufacturing exports are down a whopping 15.74 percent year-to-date. And they fell 5.28 percent in May alone. Therefore, precisely because the “comps” have been so lousy, domestic manufacturers could experience something of a rubber-band-like bounceback of their own – at least in the near-term future.

(What’s Left of) Our Economy: Picking Through the April Jobs Wreckage Details

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Employment, Great Depression, Great Recession, Jobs, Labor Department, manufacturing, NFP, non-farm jobs, non-farm payrolls, private sector, unemployment, {What's Left of) Our Economy

Today’s U.S. jobs report from the Labor Department (for April) is the first that makes fully (so far) clear the historic American employment disaster created by a combination of the CCP Virus and widespread economic shutdown and lockdown orders.

As widely observed already, the 14.9 percent national unemployment rate for the month is the highest suffered since the Great Depression of the 1930s. During this slump, (which, it can never be forgotten, helped pave the way for World War II), the annual jobless rate peaked in 1933 at 24.9 percent. Moreover, as always with these monthly jobs releases, the data only cover mid-month. So the May report will almost surely bring considerably worse new April revisions, just as the April report showed sharp downward revisions for March and even February.

Worse, as the Labor Department employment trackers observed, in April they were able to reach only about 70 percent of the number of households they tried contacting in their standard efforts to calculate that unemployment rate. They pre-virus response rate was 83 percent. And although it’s entirely possible that this weak response rate has overestimated unemployment, it could be producing an underestimate, too.

That big uncertainty aside, the revisions are a good place to start highlighting how the details of today’s numbers underscore what an unprecedented shock the economy is absorbing.

Principally, that March total plunge in non-farm payrolls (NFP, the Labor Department’s U.S. jobs universe) was first reported at 701,000 – a figure that was (sadly) exceeded four times during the Great Recession that followed the 2008-09 financial crisis. Now these March losses are pegged at 870,000 – much higher than the Great Recession peak of 784,000 in January, 2009. April, of course, has blown away such comparisons, as NFP plummeted by 20.50 million. Indeed, that’s the largest monthly decrease in absolute terms in the history of these Labor Department data, which go back to 1939.

As a result, U.S. employment levels are back to where they were in February, 2011 – meaning that more than nine years of jobs gains have just gone up in smoke.

In fact, those 20.500 million net jobs destroyed in April alone (again, this is a preliminary number, which will be re-estimated twice more in the next two months, and then again when Labor issues the next of its standard multi-year revisions) represent more than twice as much employment loss as that experienced during the entire Great Recession (whose jobs dimension lasted from December, 2007 until March, 2010) – 8.698 million.

As for the private sector, the initially reported March jobs collapse of 713,000 was topped five times during the Great Recession. But this morning’s new March jobs wipeout figure of 812,000 now matches that recession’s worst (hit in April, 2009). Tragically, the new April private sector job loss figure of 19.520 million makes even those dreadful numbers look positively quaint.

Oddly, even though its April monthly job loss was 1.33 million, manufacturing has continued to hold up relatively well so far during the CCP Virus crisis. Industry’s March payroll decline was revised down from 18,000 to 34,000. And the April figure was much worse than manufacturing’s worst month during the Great Recession (289,000, recorded for January, 2009). Moreover, the 1.330 million April manufacturing employment nosedive was more than half of the total manufacturing job decrease during the entire Great Recession (2.293 million).

All the same, since February, whereas total U.S. job totals are off by 14.02 percent since February, and private sector employment has fallen by 15.70 percent, manufacturing’s drop has been 11.87 percent.

Once more, this relatively bright picture could change either with next month’s NFP report, or relatively quickly thereafter, as the economy reopens. But it’s also important to keep in mind that the pre-Great Recession total U.S. employment peak of 138.392 million in December, 2007 wasn’t matched again until May, 2014. It took until March, 2014 for the private sector to regain its pre-recession employment peak of 116.060 million. And manufacturing has never regained its pre-recession level of 13.746 million – which itself was far from a peak, because its payrolls had been decreasing for decades. The best it did was to regain 1.413 million (61.62 percent) of the 2.293 million jobs lost during the Great Recession. This level was hit just last December.

And all these recoveries were reasonably “V-shaped” (that is rapid), by historical standards. Unfortunately, “V” seems to be a letter going out of style as economists struggle to figure out what the post-CCP Virus recovery will look like.

(What’s Left of) Our Economy: Manufacturing Job Creation Softened a Bit in May; Wages (Literally) Went Nowhere

Tags

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

I was on some travel yesterday and couldn’t put out my usual same-day, post. But here’s my analysis of the latest monthly (May) manufacturing figures contained in that morning’s employment report from the Bureau of Labor Statistics:

>U.S. manufacturing job creation shifted into a somewhat lower gear in May, with its 18,000 sequential gain the smallest such improvement since last September’s 6,000. Revisions left the last February through April monthly totals unchanged on net.

>Worse news, moreover, came on the manufacturing wages front. Pre-inflation hourly pay flat-lined on month in May – its worst such results since last November’s similar performance. In addition, April’s previously reported 0.15 percent monthly manufacturing constant dollar wage gain was revised down to 0.15 percent.

>By contrast, overall current dollar private sector wages saw their best monthly improvement (0.30 percent) since December’s 0.38 percent.

>As a result, May’s year-on-year manufacturing wage improvement before inflation totaled only 1.85 percent. Between the previous Mays, pre-inflation manufacturing wages advanced by 2.12 percent.

>These increases also lagged those for the overall private sector, where current dollar wages rose by 2.71 percent on year in May. That was the best such performance since January’s 2.77 percent. And it exceeded the 2.46 percent private sector wage gain between May, 2016 and May, 2017.

>Consequently, the wage gap between manufacturing and the overall private sector widened significantly between last May and this. As of last May, during the current economic recovery, pre-inflation private sector wages had increased 21.24 percent faster than manufacturing wages. This May, the difference was up to 28.13 percent.

>Despite May’s somewhat weaker manufacturing employment growth, the sector’s share of total non-farm employment (the Bureau of Labor Statistics’ U.S. jobs universe) remained at just under 8.53 percent. Last May, manufacturing accounted for just under 8.49 percent of total non-farm employment, meaning that during the last year, manufacturing payrolls have grown slightly faster than American payrolls in general.

>In fact, manufacturing’s May year-on-year job creation (259,000) was a tremendous improvement from the figure between the previous Mays (78,000) and the best annual gain since May, 1998’s 262,000.

>Over the longer-term, however, manufacturing remains a significant job-creation laggard. Since it’s latest employment bottom, in February and March, 2010, it’s regained 1.22 million (53.21 percent) of the 2.293 million jobs lost during the recession and its immediate aftermath.

>The overall private sector lost 8.780 million jobs from the year-end 2007 onset of the recession through February, 2010. Since then, it’s created 19.086 million net new jobs.

>Moreover, since the recession’s onset, the private sector has boosted its employment by 8.88 percent. But manufacturing payrolls are still down 7.81 percent from their December, 2007 levels.

>Manufacturing has been an even worse real wage laggard. The latest inflation-adjusted data go through April, and show that manufacturing couldn’t even match the monthly flat-line in private sector wages. In manufacturing, pay between March and April dipped by 0.09 percent.

>Year-on-year, private sector after-inflation wages inched up only 0.19 percent in April, but even that negligible growth handily beat manufacturing’s 1.10 percent decline. Between the previous April’s inflation-adjusted manufacturing wages improved by 0.55 percent.

>Indeed, both the private sector and manufacturing continue to experience technical real wage recessions (periods of cumulative shrinkage lasting at least two quarters). But in the private sector, such pay is off only 0.09 percent since last May. In manufacturing, real wages are down by this amount since January, 2016.

>And whereas private sector wages are up 4.17 percent in real terms during the current economic recovery (which is nearly nine years old), their manufacturing counterpart gained only 0.37 percent – less than a tenth as much.

(What’s Left of) Our Economy: Strong Manufacturing Jobs Numbers Still Aren’t Moving the Wages Needle

Tags

automotive, Bureau of Labor Statistics, Employment, Great Recession, inflation-adjusted wages, Jobs, manufacturing, non-farm jobs, private sector, recovery, wages, {What's Left of) Our Economy

February’s jobs report showed a continuation of strong employment numbers and weak wage performance in manufacturing. The latest 31,000 monthly jobs gain kept up a streak of strong sequential jobs increases that began in July. Manufacturing’s 224,000 year-on-year payrolls increase was its best such improvement since May, 1998’s 262,000. Revisions boosted the sector’s employment by 28,000 for December and January. Manufacturing has now regained 50.63 percent of the net jobs it lost during the Great Recession, and it since last February, has raised its share of overall U.S. employment from 8.49 percent to 8.51 percent. The automotive sector, moreover, ended a technical jobs recession that had begun in April, 2016.

Yet current dollar wages flat-lined sequentially in February for manufacturing, while they grew by 0.15 percent for the overall private sector. And the yearly manufacturing wage advance of 1.67 percent was the slowest since July, 2015’s 1.49 percent. Further, in real terms, both manufacturing wages and private sector wages are in technical recession, with the former down on net since January, 2016 and the latter since last May.

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

>February’s strong monthly employment gains and major upward revisions combined to bolster considerably manufacturing’s recent jobs performance.

>Industry’s payrolls grew by 31,000 sequentially in February, while its January jobs increase was revised up from 15,000 to 25,000, and December’s from 21,000 to 39,000.

>Largely as a result, manufacturing payrolls jumped by 224,000 on an annual basis – the best such performance since May, 1998’s 262,000.

>Between the previous Februarys, manufacturing jobs grew by just 23,000.

>Moreover, the year-on-year figures mean that manufacturing employment has been growing faster than employment in the economy’s non-farm sector (the Bureau of Labor Statistics’ American employment universe).

>Last February, manufacturing accounted for 8.49 percent of total non-farm payrolls. This February, its share stood at 8.51 percent.

>Manufacturing has now regained more than half (50.63 percent) of the 2.293 million jobs it lost since the late-2007 onset of the Great Recession through the sector’s employment bottom in February and March, 2010.

>In addition, the automotive sector – which led domestic manufacturing’s early recovery rebound from the Great Recession – ended its employment recession in February.

>A 6,200 monthly jobs gain in February plus upward January revisions helped the motor vehicles and parts industries out of a period of net employment decline that had begun in April, 2016.

>Yet manufacturing’s sterling employment performance contrasts strikingly with its still-dismal wage performance.

>Whereas overall private sector wages rose 0.15 percent sequentially in February, manufacturing wages recorded no change.

>Industry’s wage revisions were mixed, with January’s 0.11 percent growth now judged to be 0.22 percent, December’s 0.11 percent advance now pegged at 0.19 percent, but November’s 0.15 percent gain revised to zero.

>The year-on-year manufacturing wage picture is no better. Since last February, industry’s pre-inflation hourly pay is up just 1.67 percent – the slowest such rate since July, 2015’s 1.49 percent.

>Worse, between the previous Februarys, manufacturing wages grew a much faster 2.88 percent.

>Current dollar private sector wages have risen 2.61 percent on an annual basis.

>As a result, since the start of the current economic recovery, in mid-2009, pre-inflation private sector wages are up 25.80 percent more than manufacturing wages. A year ago, the gap was only 21.32 percent.

>Manufacturing’s real wage record lately has been even dimmer in absolute and relative terms.

>The latest data go through January, but that month, inflation-adjusted pay in industry fell 0.37 percent sequentially – a bigger drop than that for the overall private sector (0.28 percent).

>Year-on-year, real wages are up 0.66 percent in the private sector in toto versus a 0.29 percent dip for manufacturing.

>And worse still, although both the private sector and manufacturing are suffering real wage recession, the former’s began only last May – with after-inflation hourly pay down 0.28 percent since then.

>For manufacturing, such pay is down 0.09 percent since January, 2016.

>Further, since the current recovery’s mid-2009 onset, overall real private sector wages have risen more than ten times faster (3.98 percent) than manufacturing wages (0.38 percent).

>Over the longer term, moreover, manufacturing remains a significant jobs laggard. Whereas industry has now regained more than half the jobs it lost during the recession and its aftermath, the overall private sector has more than doubled its recessionary job losses. Since shedding 8.780 million positions on net from December, 2007 through February, 2010, it has created 18.569 million.

>In addition, manufacturing employment is still 8.24 percent below its pre-recession peak of 13.746 million jobs, overall private sector employment has risen 8.43 percent during that period.

(What’s Left of) Our Economy: Another Sign of Wage Stagnation – from the Job Turnover Numbers

Tags

Employment, Great Recession, Jobs, JOLTS, Labor Department, leisure and hospitality, non-farm jobs, professional and business services, recovery, retail, wages, {What's Left of) Our Economy

Since the economy has been moving for quite a while now to full employment (at least as conventionally measured), I haven’t been monitoring the Labor Department’s data on job turnover (the “JOLTS” figures, per the acronym of its official label) as in years past. But yesterday I checked out the numbers reported yesterday morning, and see that this lapse has been shortsighted.

For the JOLTS data are still confirming that the purportedly red-hot, super-tight U.S. labor market is still under-performing according to a key measure – wages. Indeed, the new JOLTS numbers (for November) offer one important explanation: The job openings being advertised by businesses in low-wage industries are outgrowing those in better paying sectors.

The best way to show this trend is to look at the share of total non-farm jobs (the Labor Department’s U.S. employment universe) at key recent points in the business cycle that have been comprised of low-wage jobs, and compare them with the job openings figures at those times.

To remind RealityChek regulars and clue in others, my proxy for low-wage jobs consists of the retail sector, the leisure and hospitality sector, and the big low-wage portion of the professional and business services sector (e.g., janitorial services, landscaping services, call centers, bill-collection services, security services, and the like).

As of November, the hourly wages for these sectors, respectively, were (without adjusting for inflation) $18.28, $15.60, and $20.05. For the private sector as a whole, the hourly wage that month was $26.54.

When the Great Recession broke out, at the end of 2007, these parts of the economy combined represented 26.81 percent of total non-farm employment. When it ended, in the middle of 2009, this share had dropped only to 26.23 percent (by 2.16 percent) – even as overall payrolls dropped by 5.34 percent.

Since then, the low-wage share of all U.S. jobs has risen to 27.74 percent. And the JOLTS data tell the same story – especially during the ongoing recovery.

When the recession began, and low-wage jobs were 26.81 percent of total non-farm employment, they represented 31.94 percent of the job openings advertised by American employers.

During the recession, they were actually in less demand, in absolute and relative terms. In June, 2009, with low-wage jobs accounting for 26.23 percent of the total, such positions represented just 28.38 percent of total job openings. (My figure for the low-wage professional and business services positions is based on their share of jobs in that sector for the month in question. It isn’t broken out in the official JOLTS reports.)   

The results for last November (again, the latest available)? Low-wage jobs had grown as a share of total non-farm employment to 27.74 percent. But as a share of job openings, they had risen much higher – to 34.53 percent.

So because wage lag is still such a prominent feature of the American economy, I’m back on the JOLTS case. When the quality of job opportunities in the labor market starts showing sustained improvement, we’ll have grounds for believing that the long national nightmare of stagnant wages is ending.

(What’s Left of) Our Economy: Has Subsidized Private Sector Hiring Peaked (Relatively Speaking)?

Tags

CNN.com, Employment, healthcare services, Jobs, Labor Department, non-farm jobs, private sector, real private sector, recession, recovery, subsidized private sector, The New York Times, {What's Left of) Our Economy

The Snob’s Manual tells us (often correctly) that you know when the stock market’s peaked when the retail investor rushes in, and that you know when a fad is passe when the mainstream media report it. Could the same maxim be on target for economic trends, like the outsized role played by the U.S. subsidized private sector in job creation during the recovery? I’m not sure yet, but the last few sets of monthly American employment data (including last Friday’s April figures) are certainly food for thought.

As RealityChek regulars know, I’ve been spotlighting this trend since well before RealityChek was born. And it was great to see the theme picked up last month by a major reporter who covers the healthcare sector (the core of that part of the economy dubbed private sector but in fact heavily dependent on government spending). Since then, healthcare hiring’s unusual recent robustness has been covered by The New York Times and CNN.com.

Here’s the rub: So far this year, subsidized private sector job creation has become less important in the overall employment picture, not more. The March and April statistics are still preliminary, but since January, the pace of subsidized private sector hiring has ranged between 7.87 percent of total monthly job creation (in January) to 29.31 percent (in February). The April figure was right in the middle: 19.43 percent.

The subsidized private sector’s waning momentum – at least relatively speaking – comes through more clearly when the first four months of this year are compared with their last few counterparts. From January through April, 2017, subsidized private sector net new job creation (which also includes social assistance agencies and the for-profit education sector) represented 18.43 percent of the non-farm total (the Labor Department’s definition of the American employment universe.

That share is considerably higher than the figure for the first two months of 2013 and 2014 (14.56 percent and 12.53 percent, respectively). But it’s also considerably lower than the 27.68 percent for 2015 and the 23.87 percent for the same time span in 2016. In addition, these numbers show that the subsidized private sector’s importance has not fallen for two straight years.

That’s not to say that the subsidized private sector isn’t still punching above its weight. Its 19.43 percent of net new job creation was still greater than its share of total employment on a standstill basis (15.75 percent). It’s also still higher than the share at the mid-2009 onset of the current recovery (14.97 percent). And it’s much higher than the share at the start of the last recession at the end of 2007 (13.22 percent). But there’s no doubt that this year it’s not punching quite as hard.

The flip side of the equation tells a similar, but not identical, story. The “real private sector” – where job creation is determined largely by market forces, not government decisions – stood at 68.95 percent of total non-farm jobs last month. That’s actually a little higher than its share at the start of the recovery (67.80 percent). But it’s also still a little lower than its share at the start of the last recession – more than nine years ago (70.62 percent).

There’s still a long way to go in figuring out whether these early 2017 results will hold up even through the end of this year, much less whether they represent hiring that’s peaking (again, relatively speaking) in the subsidized private sector. And of course a huge question mark is hanging over this entire chunk of the economy in the form of the healthcare debate. But the real implications are unchanged. Although subsidized private sector jobs serve many valuable purposes, the more the economy leans on them to generate employment and incomes, the less dynamic and productive the nation is bound to be.