Weekly Industry Crib Sheet: Hiring Falls Short in September
October 7, 2013
The slump in job growth continued last month, according to a report from payroll processor ADP. Economists expect this to be the most accurate picture of economic health available, given the shortage of government data caused by the shutdown.
Businesses added 166,000 jobs in September, falling short of economists’ expectations of 180,000 new positions. ADP also revised down its August figure from 176,000 to 159,000.
Goods producing industries, including manufacturing, added 19,000 jobs last month. The bulk of those -- 16,000 -- were construction positions. Factories added just 1,000 jobs.
“The labor market is not weak but not as strong as we’d like,” Scott Brown, chief economist for Raymond James & Associates Inc. in St. Petersburg, Fla., told Bloomberg. “There’s a lack of traction. It’s a sign things have slowed down a bit in the economy.”
While initial and ongoing jobless claims had been declining in the past few weeks, the pace of hiring has been much slower. This mismatch indicates that the labor market is shrinking, rather than growing.
Aircraft manufacturer Boeing is warning that delays in jetliner deliveries are possible because the federal government shutdown has furloughed thousands of aviation officials needed to inspect and certify new planes.
Federal Aviation Administration (FAA) inspectors are among the 18,000 FAA employees who have been sent home by the shutdown.
However, Boeing management said there would be no delays in production or temporary layoffs, even if the company is forced to park newly assembled aircraft and await FAA certifications.
“Boeing will continue to maintain an open dialogue with its customers and suppliers to maintain normal operations in as many parts of the business as possible," corporate spokesman John Dern said in a statement.
The slowdown would affect Boeing’s 787 factory in North Charleston, S.C. For Boeing's more estabished aircraft designs, the firm has authority to certify the planes for delivery without an FAA inspection. However, because the 787 is one of the manufacturer’s newest models, the FAA has held on to some of its airplane certification roles at the North Charleston factory, Dern told The Economic Times.
Boeing said it delivered 170 commercial aircraft during the third quarter as deliveries accelerated for three of its most important planes, The Associated Press reported.
America’s manufacturing sector continues to uptick, as a measurement for industrial activity last month climbed to its highest point in more than two years.
Manufacturing growth increased to 56.2 percent in September, half of a percentage point higher than August’s reading, according to the latest Institute for Supply Management (ISM) report. The reading is the fourth consecutive increase in the monthly index and the highest since April 2011.
The index is based on surveys of purchasing managers. A reading above 50 percent indicates expansion of the manufacturing sector, while a reading below 50 percent signals a contraction.
Eleven of the 18 manufacturing industries surveyed by ISM reported growth in September. Sectors leading the pack were: electrical equipment; appliances and components; food, beverage and tobacco products; furniture and related products; and petroleum and coal products.
Six industries reported contraction, including paper products, primary metals, textile mills, and chemical products.
The New Orders Index decreased by 2.7 percentage points last month to 60.5 percent, while the Production Index increased by two-tenths of a percentage point to 62.6 percent, the ISM reported.
As a result of the government shutdown, data on initial jobless claims, which IMT normally reports in its Weekly Industry Crib Sheet, was not available. In addition, several other key economic indicators will also be delayed indefinitely.
If the shutdown continues into next week, many more economic reports normally compiled in IMT will fail to be released.
Tuesday, Oct. 8 was the scheduled release date for the International Trade report, which details exports and imports, and updates the national trade deficit. The Labor Department will most likely not issue anything Thursday as well. Unless a compromise is reached Monday or Tuesday, it is unlikely the Producer Price Index, slated for release on Friday, will be published.
Even if a solution is reached by midweek, any reports that come out from the government will not be complete, as data stopped being compiled on Oct. 1. It is unknown if the agencies behind these reports will be able to catch up and produce accurate reports, and if so, how long that would take. This could create a huge gap whereby many reports will be deemed unreliable for weeks or even months at a time.