(What’s Left of) Our Economy: 2022’s U.S. Manufacturing Employment Winners and Losers

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automotive, durable goods, Employment, Federal Reserve, inflation, Jobs, manufacturing, nondurable goods, nonfarm jobs, private sector, recession, soft landing, {What's Left of) Our Economy

The release last Friday of the December official U.S. jobs report enables students of the economy to examine developments over the last full year, and that includes the biggest employment winners and losers in domestic manufacturing.  (Here‘s my analysis on the latest monthly manufacturing jobs data.) 

Below are the results for the broadest manufacturing categories tracked by the government, along with the durable and nondurable goods super-categories, both in absolute terms and in relative (percentage) terms. Because its fortunes have so strongly influenced those of all domestic industry, the data for the narower automotive sector will be presented as well.

(As known by RealityChek regulars, the numbers for other narrower sectors of special importance since the CCP Virus arrived stateside in force, like certain medical equipment and pharmaceuticals and semiconductors, are always one month behind. So year-on-year changes for full year 2022 won’t be available until next month.)

As with all U.S. government data, the figures below will be revised several times more. But unless the upgrades and downgrades are enormous, the year will have been marked by several important trends and comparisons with the 2021 data. In particular:

>manufacturing employment from December, 2021 through December, 2022 grew by exactly the same percent (3.02) as employment in the non-farm economy as a whole – the government’s definition of the entire economy;

>between December, 2020 and December, 2021, manufacturing job creation trailed hiring in the non-farm economy by 4.73 percent to 2.99 percent;

>between December, 2021 and December, 2022, head counts in the private sector as a whole expanded by 3.31 percent – also faster than manufacturing’s pace – but that result represented a smaller margin versus manufacturing than in 2021, when private sector payrolls expanded by 5.21 percent;

>in 2022, payrolls increased faster in durable goods (3.29 percent) than in nondurable goods (2.57 percent);

>in 2021, the durable goods edge was a smaller 3.11 percent versus 2.80 percent; 

>on a percentage basis, 2022 manufacturing job growth was broad-based. Of the 20 broad industry groupings tracked by the federal government, 15 generated additional hires and ten boosted their workforces by between two and four percent; and

>2021’s manufacturing employment increases were even broader based, however, as only the petroleum and coal products sector cut jobs.  But the spread among sectors was greater, as only eight fell into the two-four percent growth range.   

And now, the absolute yearly changes in manufacturing employment in 2022 and 2021, with the former listed in order from best performance to worst:

                                                                       2022                    2021

manufacturing total                                     379,000               365,000

durable goods                                              257,000               236,000

nondurable goods                                        122,000               129,000

transportation equipment                               90,800                 50,400

food manufacturing                                       59,100                  29,200

fabricated metal products                              43,900                  46,000

machinery                                                      41,000                  27,500

chemicals                                                       31,000                  26,300

computer & electronics products                   30,200                  14,600

miscellaneous nondurable goods                   18,400                  40,300

plastics & rubber products                             16,700                  20,100

miscellaneous durable goods                         15,600                  31,700

wood products                                                12,000                  16,900

non-metallic mineral products                       14,200                    3,300

primary metals                                                 9,900                  11,600

electrical equipment & appliances                   7,500                 17,500

paper & paper products                                    5,200                      800

printing & related support activities                   300                   7,000

apparel                                                               -300                   2,100

petroleum & coal products                             -1,600                  -4,400

textile mills                                                     -3,400                   3,900

textile product mills                                        -3,500                   4,000

furniture & related products                            -8,000                15,600

20-21 absolute changes

And here are those percentage changes, with the 2022 results again listed from best performance to worst:

                                                                           2022                   2021

manufacturing total                                            3.02                    2.99

durable goods                                                     3.29                    3.11

nondurable goods                                               2.57                    2.80

transportation equipment                                   5.43                     3.11

miscellaneous nondurable goods                       5.42                  13.46

machinery                                                          3.84                    2.64

food manufacturing                                           3.56 `                  1.79

chemicals                                                           3.53                    3.09

non-metallic mineral products                           3.48                    0.81

fabricated metal products                                   3.11                   3.37

wood products                                                    2.87                   4.21

computer & electronics products                       2.83                   1.39

primary metals                                                   2.78                   3.36

miscellaneous durable goods                             2.49                   5.33

plastics & rubber products                                 2.21                   2.82

electrical equipment & appliances                     1.86                   4.55

paper & paper products                                      1.48                   0.23

printing & related support activities                   0.08                   1.91

apparel                                                               -0.32                   2.28

petroleum & coal products                                -1.52                  -4.01

furniture & related products                              -2.09                   4.24

textile product mills                                           -3.32                   3.94

textile mills                                                        -3.39                   4.05

As for the automotive sector, which is placed within the broader transportation equipment category, it added 54,200 workers in 2022, a 5.50 percent advance. So among the above industries, on a percentage basis, it takes the job creation crown for industry during the past year.  Vehicle and parts makers enjoyed a strong 2021 employment-wise, too, enlarging their workforce by 4.05 percent, or 38,300.

A final noteworthy point: Manufacturing’s hiring performance doesn’t seem to have been strongly related to its production growth. In 2021, when industry’s payrolls expanded by 2.99 percent, its inflation adjusted output rose by 4.19 percent. But last year, when manufacturers upped their headcounts by 3.02 percent, their real production annual growth (through November – the lastest data available) slowed to 1.40 percent.

This year, the economy could well tip into recession, or perhaps at best achieve the “soft landing” sought by the Federal Reserve in its fight against inflation. In other words, U.S.-based manufacturers could well face a new test of the growth and hiring resilience they’ve shown so far since the pandemic’s arrival.            

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(What’s Left of) Our Economy: A Rosier May U.S. Jobs Picture – Including for Manufacturing

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CCP Virus, coronavirus, COVID 19, Jobs, Labor Department, manufacturing, nonfarm jobs, private sector, reopening, Wuhan virus, {What's Left of) Our Economy

As of this morning’s stunning U.S. employment report from the Labor Department (for May), it looks like I’m wrong on the strength and speed of the recovery from the nation’s CCP Virus-induced recession. And I couldn’t be happier. (See here for my most recent forecast.)

What’s also critically important to note is that the announcement that the economy last month created a net new 2.51 million jobs over April’s levels seems to belie warnings that reopening the economy sooner rather than later would bring disastrous public health consequences – even with considerable social distancing, mask-wearing, and other protective measures. But the economic shutdowns began to be lifted in late April, and here it is early June, and no new spikes in virus infections, hospitalizations, and deaths have been recorded.

Further, strong reasons can be cited for believing that payrolls improvement will continue, at least until the arrival of a notable second wave, assuming one’s coming. For as usual, the May jobs report is based on the mid-month situation. One possible cause for concern, though: The response rates of the businesses and households surveyed remain lower than they were before the pandemic struck. So it’s possible that considerable economic distress is being missed.by the Labor Department’s canvassers.

All the same, let’s not pretend that the employment picture is anywhere close to good or even acceptable. The unemployment rate remains at an horrendous 13.3 percent, and non-farm payrolls (the Labor Department’s definition of the U.S. jobs universe) are still down by fully 17.67 million year-on-year.

Moreover, the new upswing is starting from a lower baseline than originally reported, for March net jobs losses are now pegged at 1.37 million, not the 701,000 first estimated, and April’s decrease has been revised from 20.50 million to 20.69 million.

Just for comparison’s sake, job losses during the Great Recession that followed the 2007-08 financial crisis totaled 8.69 million (from December, 2007 through February, 2010). And pre-recession employment levels weren’t regained until May, 2014. The very speed and strength of the latest jobs nosedive could mean that the employment recovery will be notably faster – as perhaps indicated by this morning’s data. But there’s also much more ground to be made up.

Interestingly, the CCP Virus impact on manufacturing remains smaller than on the rest of the economy. True, on a percentage basis, industry’s month-to-month jobs comeback (225,000 in absolute terms) was less on a percentage basis (1.96 percent) than that of the private sector overall (2.86 percent) – although slighly higher than that of the total economy (1.92 percent, a figure that of course includes hard-hit state and local governments).

But that’s partly because the manufacturing payrolls slump has been somewhat milder. The sector’s March employment losses have been upwardly revised from an originally reported 18,000 to 46,000. But last month’s initial April estimate of a 1.33 million jobs decline is now judged to be a slightly better 1.32 million.

Since February, therefore, whereas the total economy has shed 12.82 percent of its payrolls and the private sector 13.87 percent, manufacturing employment is off by 9.78 percent.

Let’s not be pollyannish, though. From its pre-Great Recession level to the trough, manufacturing lost 2.293 million jobs. And even at their peak during the pre-virus recovery (last December), only 61.71 percent had been regained.

That is, thanks to the CCP Virus, both the U.S. economy overall and its manufacturing sector remain awfully sick on the employment front.

(What’s Left of) Our Economy: A Great Recession-Like Jobs Report

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BLS, Bureau of Labor Statistics, CCP Virus, Employment, Great Recession, Jobs, manufacturing, nonfarm jobs, private sector, {What's Left of) Our Economy

Since this U.S. economic nosedive is, as the Monty Python crew liked to say, “completely different,” this post will depart from its usual format, too – by trying to provide some perspective on today’s horrendous (March) employment report from the Bureau of Labor Statistics (BLS). Unfortunately, this perspective isn’t terribly comforting. 

First, three reminders:

>The insanely astronomical number of jobless claims applications filed in the last two weeks make clear that at least in the near future, the employment situation will become much worse. Specifically, these claims numbers have totaled some 10 million in the last two weeks alone. That’s 7.75 percent of the entire private sector workforce as of the March figures.

>Similarly, as with all the monthly U.S. jobs reports, the March number described the situation only as of mid-month. Most of the economy and broader American CCP Virus-related shutdown measures were mandated or suggested afterwards.

>And in this vein, this morning’s March data were only preliminary. They’ll be revised twice more in the next two months, and then the full-year 2020 results will be revised. Indeed, the job creation figures for January and February (which were still decidedly strong) were downgraded by 57,000 in all.

Having cleared away that brush, it’s still interesting to note that, however terrible the new numbers are – and however terrible-er they’re bound to get – so far the March jobs meltdown hasn’t been as bad as the monthly nosedives suffered during the Great Recession. But it’s already way too close for comfort.

Whereas total nonfarm jobs (the BLS’ U.S. jobs universe) fell on month in March by 701,000, during the previous decade’s punishing downturn, that figure was topped no less than four times, and peaked at 784,000 in January, 2009.

Moreover, no sequential employment growth returned till that November, and it hit just 12,000. Worse, the very next month, payrolls sank by 269,000. The bottom was finally hit in February, and jobs growth recovered slowly afterwards, in fits and starts. Year-on-year employment gains didn’t reemerge until September.

As for private sector jobs, last month’s 713,000 collapse was exceeded during the Great Recession five times, with the worst results coming in April, 2009 (when 812,000 jobs were wiped out).

Private sector employment bottomed in February, 2010, too, and also rebounded sluggishly unevenly, with year-on-year gains coming only in August.

All told, 8.698 million jobs were lost from the onset of the Great Recession (December, 2007) to that February, 2010 trough. For the private sector, the losses totaled 8.794 million. Both figures are alarmingly close to the sum of the last two weeks’ jobless claims.

Interestingly, manufacturing jobs fell by only 18,000 sequentially in March. And on a yearly basis, they’re actually up by 12,000.

But since so many customers for American manufacturers are the workers who are being sidelined, and their former employers who are closing their doors or scaling their operations way back, these numbers, too, are bound to skyrocket.

Will a recovery in manufacturing and overall employment come even as quickly as after the Great Recession (which, again, wasn’t so quick)? Because this slump really is so “completely different” due to its biological origins, that’s the $64,000 Question. Given that a virus second wave is distinctly possible before vaccines or cures are ready, and given that normality as a result is only likely to return slowly to any business or consumer activity that requires close person-to-person proximity, there’s room for plenty of doubt.

 

(What’s Left of) Our Economy: U.S. Employment Gains Have Been Heavily Subsidized by Government, Pt 2: Giving a JOLT to Job Openings

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Employment, Federal Reserve, healthcare services, job openings, Jobs, JOLTS, nonfarm jobs, private sector, private sector jobs, subsidized private sector, {What's Left of) Our Economy

Yesterday, RealityChek reported on how the U.S. economy’s subsidized private sector has been dominating total job creation during the current economic recovery. Today, we’ll document another way in which these industries – which are heavily dependent on government subsidies – are playing a similar role when it comes to job openings. That measure of the labor market is especially important, since it’s a part of one of Fed Chairman Janet Yellen’s favorite measure of the health of American employment – the so-called JOLTS report that tracks job openings, layoffs, and turnover.

The JOLTS data for October came out yesterday, and show that total non-farm job openings in the United States two months ago (the American employment universe according to Labor Department statisticians) totaled 5.383 million. That still-preliminary figure is the third highest for the economic recovery, which began in June, 2009.

According to the JOLTS report, the private sector accounted for 90.79 percent of those openings, which seems to indicate that the vast majority of American job-creation for the foreseeable future will be coming in that part of the economy that typically generates most of its productivity growth and innovation, since its performance is largely determined by free market forces.

But as we keep noting, much of America’s so-called private sector is comprised of industries, like health-care services, where levels of consumption, output, and therefore hiring depend heavily on government spending. In October, the JOLTS report revealed that this subsidized portion of the private sector accounted for 19.86 percent of job openings. Consequently, the “real” private sector share was only 70.93 percent.

The difference in just one year has been eye-opening. In October, 2014, the subsidized private sector was responsible for only 17.61 percent of total job openings, and the real private sector generated 73.95 percent.

Last October and this past October, the real private sector performed much better in this regard than at the beginning of the recovery. Then, it accounted for only 64.74 percent of all job openings, and the share of the subsidized private sector was way up at 21.98 percent. Back then, though, the private economy was still wheezing (employment is usually a lagging economic indicator), and health-care services were holding up the entire U.S. labor market.

A better comparison might be with December, 2007 – when the last recession technically began. The economy was already suffering from the bursting of the housing bubble, and consequent Wall Street turmoil. But the real private sector still produced 72.08 percent of all U.S. job openings, and the subsidized private sector share was 17.74 percent.

In other words, government subsidies are responsible for a higher percentage of the American economy’s new employment opportunities today than at the end of the last economic expansion – even though today’s recovery is more than six years old. Moreover, the October-to-October comparisons show that the trend is moving in exactly opposite of the desired direction, in which the real private sector would be increasingly important in the country’s employment picture.

As I’ve repeatedly stated, the subsidized private sector is an essential part of the economy – and it’s hard to imagine how the government could completely or even substantially exit areas like health-care services for the foreseeable future even if the American people wanted this result. (And there’s no indication that they do.) But the subsidized private sector’s historically large, outsized role in not only job-creation but job-opportunity creation seems more like a sign that the U.S. labor market remains badly damaged from the financial crisis and ensuing recession, not that it’s nearly recovered.