May 30, 2024

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The Legal System

Dana Milbank

(What’s Left of) Our Economy: U.S. Manufacturing Job Growth is Down, but Don’t Count it Out

As shown by the new (for November) official U.S. employment report, domestic manufacturing’s job creation has been so strong since the CCP Virus arrived state-side in force that even one lagging month didn’t change its recent status as a national hiring leader.

That said, Friday’s report on what are called non-farm payrolls (NFP – the U.S. government’s definition of the American jobs universe) also revealed that, as with the entire economy, manufacturing job creation has downshifted in recent months. Whether it will stall out or worse going forward, however, remains a very open question.

Domestic industry upped payrolls by 14,000 sequentially in November – its weakest performance since shedding 28,000 positions in April, 2021. Revisions were positive, but just mildly, with October’s initially reported gain of 32,000 now pegged at 36,000, and September’s increase remaining at a slightly upwardly revised 23,000.

These results are less impressive than those from the first half of this year, when manufacturers boosted employment by a monthly average of nearly 40,000, and three months saw gains of more than 50,000. Yet since February, 2020 – the last full data month before the virus began spreading rapidly and roiling the economy – industry’s employees have increased by 1.17 percent. That’s better than the gain for the private sector overall (1.16 percent) and for the non-farm economy (0.68 percent).

Manufacturing’s share of all private sector jobs and all non-farm jobs did dip in November – from 9.87 percent of the former to 9.86 percent, and from 8.43 percent to 8.42 percent for the latter. But both shares are still higher than in February, 2020 – which were 9.83 percent and 8.38 percent, respectively.

In addition, the November manufacturing employment advance kept its head count at the highest level (12.934 million) since November, 2008’s 13.034 million.

November’s biggest manufacturing jobs winners among the broadest sub-sectors tracked by the U.S. Labor Department were:

>transportation equipment, a big diverse sector that added 6,100 workers. And revisions were nothing less than spectacular. October’s initially reported advance of 4,700 is now estimated as a surge of 13,200. September’s result is now judged as a 6,300 jump after having been revised down from an initially reported 8,400 increase to one of 4,700. And August’s initially reported 2,400 jump was jaw-droppingly upgraded to one of 10,500 and then to a 20,900 burst, which is the final figure for now. This rocket ride has pushed transportation equipment employment to 1.08 percent above the levels of immediately pre-pandemic-y February, 2020 versus the 0.14% calculable last month;

>chemicals, another big, diverse sector which raised employment by 4,700 – its best monthly result since May’s 5,100. Revisions, however, were mixed. October’s initially reported 1,600 increase was revised up to one of 2,200. September’s initially reported rise of 3,400 was downgraded to one of 2,700 but then revised back up to a 3,200 increase. But August’s initially reported gain of 3,500, which was revised up to 3,900, was then downgraded to a final total of 2,700. Still, chemicals payrolls have now climbed by 7.32 percent since the pandemic’s arrival in force, versus the 6.64 percent calculable last month;

>machinery, whose 3,900 net new employees were especially encouraging bothnew because this hiring was the strongest since April’s 5,800, and because this industry’s products are used so widely througout the rest of manufacturing and the entire economy. Even better, revisions were considerably positive. October’s initially reported improvement of 3,000 was upgraded to one of 3,600. September’s initially reported 1,700 decrease (which had been the worst since last November’s 7,000) was revised up to a decline of 300 and then estimated as the same. And after being revised down from 2,800 to 2,200, August’s increase was revised back up to the now final figure of 2,800. Whereas machinery employment was off by 0.90 percent from February, 2020 levels as of last month, it’s now within 0.55 percent; and

>food manufacturing, another big sector, and one that hired 3,400 net new workers. Revisions were mixed here, too. October’s initially reported increase of 1,000 was cut in half, to 500. But September’s initially reported 7,800 pop (the best such performance since February’s 11,100) went unrevised and then was downgraded to a still impressive 7,600. And although August’s initially reported 2,400-job loss was first revised up to one of 1,000, it was then downgraded to a decrease of 2,700, which is where it’s stayed. Food manufacturing’s workforce has now grown by 3.52 percent since the pandemic began hammering the economy, versus the 3.36 percent calculable last month.

The biggest November jobs losers among the broadest manufacturing categories were:

>plastics and rubber products, whose 3,200 employment drop was its biggest since the 4,400 plunge in September, 2021 – and where revisions were negative, except for one that was in the “jaw-dropping” category, too. October’s initially reported increase of 3,000 was revised down to 700. September’s initially reported loss of 1,400 was upgraded to a gain of 600 before being revised way down to a decrease of 2,400. And after being revised down from an advance of 900 to one of 100, August’s job creation estimate soared to 4,400, where it remained Friday morning. But the post-February, 2020 increase in plastics and rubber products jobs fell from the 4.94 percent calculable last month to 3.76 percent;

>electrical equipment and appliances, whose 2,400 monthly employment decrease was the worst since May, 2020’s 6,100. Revisions, moreover, were significantly negative. October’s initially reported net new hiring of 300 is now judged to be a decline of 1,300. September’s initially reported rise of 3,000 has been downgraded twice – to one of 1,300 and then to 1,100. And August’s gains, which were first upgraded from 800 to 1,700, were then revised down to their final figure of 1,200. As a result of these setbacks, the payrolls of electrical equipment- and appliance-makers are now just 2.72 percent higher than in immediately pre-pandemic-y February, 2020, versus the 3.77 percent calculable last month;

.>paper and paper products, whose companies shed 2,000 jobs, their worst performance since the 2,800 drop in April, 2021. Revisions overall were negative. October’s initially reported increase of 900 was revised up to 1,300 (the best such performance since this past April’s 2,100). September’s initially reported rise of 100 was upgraded significantly to 1,200 before being downgraded to an advance of 700. And August’s initially reported loss of 700 was revised up to one of 500 but then downgraded to a 1,000 decline. Employment in this sector is now 1.10 percent lower than in February, 2020 versus the -0.52 percent calculable last month; and

>primary metals, where head counts weakened by 1,700 for the worst such result since the 9,200 nosedive in May, 2020 – as the Virus pandemic was just off its peak. Yet revisions were positive on net. October’s initially reported drop of 200 is now judged to have been a gain of 900. September initially reported decrease was upgraded even more – to an increase of 2,700 – before being revised back down to one of 2,300. And August’s initially reported improvement of 1,400 was downgraded to one of 600 before being upgraded to 900, where it remained today. Primary metals employment is now 3.95 percent lower than just before the pandemic’s arrival in force, versus the 3.68 percent calculable last month.

One industry followed closely by RealityChek throughout the CCP Virus period registered healthy solid employment gains in November. Job numbers in the automotive sector climbed by 1,900, and revisions were dramatically positive. October’s initially reported increase of 4,800 is now judged to have been 7,500. September’s initially reported growth of 8,300 was first downgraded to 7,400 but then revised up to 9,000. And August’s initially reported drop of 1,900 to a jump of 4,000 and then way up to a burst of 12,000 – its final figure for now and the best such result since March’s 18,400. This hiring wave left automotive sector head counts 4.17 percent higher than in immediately pre-CCP Virus February, 2020, versus the 3.54 percent calculable last month.

As known by RealityChek regulars, data for several other industries of special interest since the pandemic era began are always a month behind the figures for these broader categories, and these October results were generally good.

The shortage-plagued semiconductor industry added 2,300 jobs in October, possibly representing an early sign of the major Made in America incentives contained in the recently passed CHIPS and Science Act. The increase was the best since June, 2020’s 3,000, but revisions were only mixed. September’s initially reported advance of 800 is now judged to be a drop-off of 1,000, but August’s initially reported 1,200 increase was revised up to its now final figure of 1,500. Semiconductor industry employment is now 6.01 percent higher than in February, 2020, versus the 5.74 percent calculable last month.

The aerospace industry was hard hit by the pandemic because of all the national and worldwide travel restrictions put in place. In October, however, this sector’s jobs comeback generally continued strongly. Employment by aircraft manufacturers expanded by 3,900 that month, the best such result since June, 2021’s 4,400. September’s initially reported 1,300 increase was taken down a peg to 1,200, but August’s initially reported gain of 1,300 was revised up to 1,700 and left unrevised yesterday morning. As a result, aircraft manufacturing jobs are now 5.85 percent below their immediate pre-pandemic levels, versus the 7.41 percent calculable last month.

Aircraft engines- and engine parts-makers boosted payolls by 700 in October, their best such perfomance since July’s 800. Revisions were negative on balance, with September’s initially reported job decrease of 100 staying unrevised and August’s initially reported increase of 800 downwardly revised to a final figure of 400. Aircraft engines- and engine parts-makers employment consequently closed to within 8.07 percent of its pre-February, 2020 level, versus the 8.83 percent calculable last month.

Non-engine aircraft parts- and equipment-makers hired 100 net new workers in October, and revisions were mixed. September’s initially reported slip of 500 is now judged to have been one of 700 but August’s initially reported jump of 1,100 was revised up to a final figure of 1,300 – the best such result since January’s 1,400. The non-engine aircraft parts workforce is now 14.45 percent smaller than in since February, 2020 versus the 14.36 percent calculable last month.

The surgical appliances and supplies category contains the personal protective equipment, respirators, and other products central to the U.S. response to the CCP Virus, and kept on enlarging its workforce (by 400) in October. Revisions were mixed, as September’s initially reported job decrease of 200 was downgraded to one of 300, but August’s reported gains have been upgraded from.700 to 800 to 900 – the strongest such perfomance since March’s 1,100. Employers in this sector have now increased their workforce by 5.59 percent since just before the pandemic’s economic – and health – impact began to be fully felt, versus the 5.11 percent calculable last month.

The employment total for pharmaceuticals and medicines flatlined in October, and revisions were oveall negative. September’s initially reported employment expansion was revised up from 1,000 to 1,200 – the best since June’s 4,000. But August’s initially reported gain of 1,700 remained at a significantly downgraded 300. The head count in this sector is now 11.64 percent bigger than in immediately pre-pandemic-y February, 2020 versus the 11.58 percent calculable last month.

Finally, the medicines subsector containing vaccines added 600 net new workers in October in the strongest job increase since June’s 900. Revisions, though, were mixed, with September’s initially reported gain of 200 upped to 500 but August’s initially reported 900 increase now estimated at a decrease of 600 – the biggest drop since December, 2018’s 1,100. Vaccine-makers’ payrolls have now swelled by 26.29 percent since February, 2020, versus the 25.58 percent calculable last month.

The confusion surrounding the U.S. economy’s growth prospects for the foreseeable future inevitably create uncertainty about manufacturing’s outlook. As noted in this previous post, many forward-looking indicators look pretty worrisome, but at least through the end of this year, expansion seems to have  been continuing at a healthy rate.

Big questions about the Federal Reserve’s approach to inflation-fighting are also clouding the manufacturing forecast. But what may be especially revealing is that even during the first half of this year, when the economy tumbled into a recession, manufacturing, along with the rest of the private sector kept hiring, and kept reporting a strong desire to fill lots of empty positions. So until some convincing evidence appears that this striking, pandemic-era pattern will change if a slowdown does begin, I’ll be cautiously bullish about manufacturing job creation.