NAM Says February Employment Report is stronger than expected.
Press Release Summary:
According to Bureau of Labor Statistics, manufacturers added 14,000 additional workers in February. NAM chief economist Chad Moutray called this "a good start" and said yet more work needs to be done. According to Moutray, policymakers should continue to focus on making business environment "as pro-growth as possible," and manufacturers need policies to compete better globally. If that occurs, said Moutray, achieving average job growth of 20,000 each month should be obtainable.
Original Press Release:
February Employment Report Stronger than Expected
Manufacturers added 14,000 additional workers in February according to the Bureau of Labor Statistics. That is roughly equal to the average monthly gain of 13,000 experienced in 2012, with the first half of the year clearly being stronger than the later months. Even with this progress, we can’t help but hope to see better numbers with the manufacturing sector producing on all cylinders.
In his keynote address last month at the Detroit Economic Club NAM President and CEO Jay Timmons laid out a “20/20 Vision” for faster growth between now and 2020. This set a goal of having industrial production grow by 4.5 percent annually, manufacturers creating 20,000 jobs each month on average, and real GDP increasing at least by 3.5 percent annually. If we could achieve that growth imagine the possibilities.
February’s jobs numbers represent a good start, but there is still much more work to be done. Policymakers need to continue to focus on making the business environment as pro-growth as possible. Our manufacturers need policies to better compete globally. If that occurs, achieving an average job growth of 20,000 each month should be an easily obtainable goal.
Looking specifically at this month’s manufacturing numbers, durable goods employment rose by 6,000, with 8,000 additional workers in nondurable goods industries. Hiring growth was mostly mixed, despite the net increase in February. The largest gains were seen among fabricated metal products (up 6,400), wood products (up 4,000), food manufacturing (up 3,400), chemicals (up 2,600), transportation equipment (up 2,300), and plastics and rubber products (up 1,900). These were counteracted by declines in primary metals (down 2,000), machinery (down 1,800), electrical equipment and appliances (down 1,800), petroleum and coal products (down 1,500), and computer and electronic products (down 1,200).
The additional net hiring was consistent with increases in hours worked. The average number of hours in the workweek rose slightly in manufacturing from 40.7 hours to 40.9 hours, with increased activity in both durable and nondurable goods sectors. The average overtime hours rose from 3.3 hours to 3.4 hours. As a result, the average weekly earnings for the industry increased from $978.43 to $986.10.
Overall the U.S. economy added 236,000 nonfarm payroll jobs in February. This is above the consensus estimate of around 155,000. In addition, the unemployment rate fell from 7.9 percent in January to 7.7 percent in February, its lowest point since December 2008. There was a slight decrease in the participation rate from 63.6 percent to 63.5 percent, with 296,000 workers falling out of the labor force. The employment picture appears to have stabilized and strengthen a bit, even with a number of persistent headwinds.
Recent data show some improvements in manufacturing production and sales, but also indicate that businesses remain frustrated by the U.S. fiscal situation and only modest growth in new orders, particularly for exports. In addition, the most recent Beige Book noted that some manufacturers were citing regulations and the Affordable Care Act as reasons for restrained hiring.
While manufacturing employment appears to have stabilized, it is clear that we could definitely see even better job growth. It’s important to note some of the gains in manufacturing employment were offset by losses in several sectors. We need to see growth across all sectors of manufacturing if we are going to turn the corner and create 20,000 jobs each month.
Chad Moutray is chief economist, National Association of Manufacturers.
