January saw U.S. manufacturing employment rise by 15,000 sequentially, but this monthly gain was the smallest since September’s 6,000 and combined with negative revisions, indicated that the sector’s healthy recent jobs growth might be cooling.
More encouragingly, manufacturing wages before adjusting for inflation rose sequentially for the second straight month (by 0.11 percent), and revisions on this front were positive. Yet industry remained a wage laggard, as overall private sector pay improved by 0.34 percent on month, and topped manufacturing’s annual wage increase by 2.89 percent to 1.90 percent. That manufacturing figure, moreover, represented a deceleration from the 2.73 percent increase between the previous Januarys. Between January, 2016 and 2017, the private sector’s wages increase of 2.40 percent actually trailed the manufacturing wages hike.
Despite the relatively weak employment start to 2018, manufacturing payrolls continued rising slightly faster than those of the economy overall, as its share of total non-farm employment (8.49 percent) was higher than last January’s level (8.47 percent). Automotive employment remained a trouble spot within manufacturing; combined motor vehicles and parts payrolls dipped (by 300) for the first time since October. Worse, the sector remained in a jobs recession, as employment is down on net by 4,600 since July, 2016.
Here’s my analysis of the latest monthly (January) manufacturing figures contained in this morning’s employment report from the Bureau of Labor Statistics:
>Signs of a manufacturing employment slowdown appeared in January’s non-farm payrolls report, as the monthly jobs gain of 15,000 was the lowest such figure since September’s 6,000.
>In addition, December’s 25,000 on-month employment increase was revised down to 21,000, November’s 31,000 improvement is now judged to be 30.000, and October’s 23,000 rise was revised down to 20,.000.
>Pre-inflation manufacturing wages did rise sequentially in January for the second straight month, but industry’s status as a paycheck laggard continued, and the gap between its wage increases and those of the private sector overall widened further.
>The January monthly wage increase of 0.11 percent trailed the private sector’s 0.34 percent.
>December’s 0.11 percent sequential wage rise was revised up to 0.30 percent and November’s 0.15 percent decrease is now judged to be a flat-line.
>But the initially reported December private sector wage advance of 0.34 percent was revised up, too – to 0.41 percent.
>Viewed on a year-on-year basis, manufacturing’s 1.90 percent current dollar wage improvement badly trailed the 2.89 percent increase recorded by the private sector – its best such figure since May, 2009’s 2.93 percent.
>Between the previous Januarys, manufacturing wages rose faster than the private sector’s as a whole – 2.73 percent to 2.40 percent.
>As a result, since the start of the current economic recovery, in mid-2009, pre-inflation private sector wages are up 25.56 percent more than manufacturing wages. A year ago, the gap was only 20.93 percent.
>Although manufacturing employment may be slowing, it’s still increased at a slightly faster rate than total non-farm employment (the U.S. government’s jobs universe) over the last year. In January, 2017, manufacturing jobs represented 8.47 percent of total American jobs. This January, the figure is up to 8.49 percent.
>The January jobs report, however, revealed continuing problems in automotive employment. This sector led industry’s strong growth and employment rebound from the deep recession that ended in mid-2009. But in January, its payrolls shrank sequentially (for the first time since October) by 300, keeping the combined motor vehicle and parts industries in a technical jobs recession.
>Since April, 2016, automotive employment is down on net by 4,600.
>On an annual basis, total manufacturing employment still showed some momentum.
>The January year-on-year payrolls increase of 186,000 was the best such figure since May, 2015’s 189,000. Between the previous Januarys, manufacturing lost 15,000 jobs.
>And since its employment bottom, in February and March of 2010, manufacturing has regained 48.06 percent (1.102 million) of the 2.293 million jobs it had lost since the December, 2007 start of the recession.
>But the overall private sector’s longer-term jobs performance continues to be much better. Since its February, 2010 jobs bottom, employers in this sector have boosted their payrolls by a net 18.232 million – more than twice the 8.780 million net positions lost during the recession and its aftermath.
>And whereas manufacturing employment remains 8.66 percent (or 1.191 million jobs) lower than when that recession began at the end of 2007, private sector employment is up by 8.14 percent (9.447 million jobs).
>On the wage front, moreover, manufacturing’s performance in price-adjusted terms is even worse than in pre-inflation terms.
>The latest figures are for December, and despite rising sequentially by 0.19 percent, real manufacturing wages remained in a long recession.
>Since March, 2016, they are down on net by 0.09 percent.
>Year-on-year, the 0.28 percent December decline in real manufacturing wages contrasts sharply with their 0.93 percent increase between December, 2015 and December, 2016.
>December’s monthly improvement in constant dollar private sector wages (0.28 percent) also exceeded manufacturing’s (0.19 percent).
>As a result, during the current recovery (which is now more than eight years old) real private sector wages are up by 4.27 percent – a meager improvement, but more than five times faster than the 0.84 percent advance in inflation-adjusted manufacturing wages.