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Manufacturing Biweekly Update

March 18, 2011 [past updates]


U.S. Manufacturing Trends Current Period Year-to-Date
Wage Rates up up
Profits down up
Employment up up
Production up up
Capacity Utilization up up
Productivity up up
Exports down down
Goods Shipments up up


Biweekly Notes

U.S. Industrial Production Falls 0.1%; Manufacturing Gains

Industrial production unexpectedly declined in February, led by a plunge in utility use, a Federal Reserve report showed today. Manufacturing rose as automakers ramped up assembly lines. Output decreased 0.1 percent after a 0.3 percent gain in January that was initially reported as a decline. Manufacturing, which makes up 75 percent of the total, rose 0.4 percent last month following a 0.9 percent gain that was three times as large as the prior estimate. Utilities output fell 4.5 percent on milder weather. Manufacturers such as Texas Instruments Inc. and General Motors Co. are benefiting from rising overseas demand, business investment and inventory restocking. Fed policy makers this week said the economy is on a “firmer footing” as companies and consumers increase spending. “Manufacturing is going to remain healthy and expand at a moderate pace,” said Neil Dutta, an economist at Bank of America Merrill Lynch Global Research in New York. “A lot of the weakness was centered in the utilities component, with February maybe a little warmer than people were expecting.”

(Bloomberg Businessweek |March 17, 2011)
www.businessweek.com

G7 Nations Intervene In Currency Markets, Amid Concerns That Yen's Rise Threatens Trade

The yen fell against the dollar Friday, as the currency intervention announced Thursday night began, Reuters reports. Japan's central bank bought more than $25 billion, according to traders' estimates. Central banks in Germany, Italy, Britain and France prepared to contribute their support. On news of a coordinated intervention not seen since 2000, the yen fell against the dollar, and the Japanese Nikkei 225 stock index rose. As Japanese factories and ports lie in ruins, a new threat to trade has emerged. The yen reached a record-high value Thursday, making exports more expensive and raising fresh concerns about the prospect of Japan's economic recovery. Last Friday's 9.0-magnitude earthquake off Japan's northeastern coast has destroyed factories that produce goods for export, and it has ruined roads and ports that would otherwise be used to export those goods. Already, trade disruptions have prompted experts to downgrade their forecasts for the country's economy. Now, the outlook seems even worse: The value of Japan's currency has risen to a territory not seen since World War II, meaning the products that Japan does manage to export will seem less attractive to buyers. Amid concerns that this development could affect economies worldwide, leaders from the Group of Seven industrial nations, in a release issued Thursday evening, pledged to support Japan's economy with financial intervention while declining to say what this intervention would entail. Starting Friday, the U.S., the U.K., Canada and the European Central Bank will join Japan in attempting to tame exchange rates, the U.S. Treasury said in the release. There seemed to be an acknowledgement that economic pain in Japan could be felt worldwide. But the real strain, experts say, will be in Japan. The yen's rise could hardly be coming at a worse time for the country. "It's one more blow to the Japanese economy," said Nariman Behravesh, chief economist of IHS Global Insight. "A strong yen is the absolute last thing they need right now."

(Huffingtonpost.com |March 18, 2011)
www.huffingtonpost.com

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U.S. Manufacturing Key Facts

Manufacturing Wage Rates

  • In February 2011, average hourly earnings in manufacturing were $18.94, up 0.11 percent from January 2011’s $18.92 (preliminary), and up 2.49 percent from February 2010’s $18.48.

    (BLS/DOL Employment data from “The Employment Situation, USDL 11-0271,” released March 4, 2011; next release is April 1, 2011)
    http://www.bls.gov/news.release/pdf/empsit.pdf

       

Manufacturing Wage Rates (Quarterly, Yearly)

  • In the fourth-quarter of 2010, hourly compensation from previous quarter, annual rate (revised) was up 3.1 percent in total manufacturing, up 3.0 percent in durable manufacturing and up 2.9 percent in nondurable manufacturing.

  • In the fourth-quarter of 2010, hourly compensation of all manufacturing workers increased 1.5 percent, compared to a 5.2 percent increase during the fourth-quarter of 2009. Real hourly compensation in the total manufacturing sector increased 0.3 percent in the fourth-quarter of 2010, compared to 3.6 percent increase in the fourth-quarter of 2009.

    (BLS/DOL Productivity data from “Productivity and Costs, Fourth Quarter and Annual Averages 2010, Revised,” USDL 11-0270, released March 3, 2011; next release is May 5, 2011)
    http://www.bls.gov/news.release/pdf/prod2.pdf

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Manufacturing Profits

  • In the third quarter of 2010, manufacturing profits decreased 2.9 percent, or $7.9 billion, to $269.2 billion from $277.1 billion in the first quarter. Compared with third quarter profits of 2009, manufacturing profits were up $117.4 billion in the third quarter of 2010.

  • Third quarter 2010 profits for all non-financial industries (manufacturing being a subcategory) decreased $0.7 billion from the second quarter of 2010 to $1,033.3 billion.

    (BEA/DOC GDP data from “Gross Domestic Product and Corporate Profits, BEA 10-54,” released December 22, 2010; next release is March 25, 2011)
    http://www.bea.gov/newsreleases/national/gdp/2010/pdf/gdp3q10_3rd.pdf

       

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Manufacturing Employment

  • In February 2011, manufacturing employment went up, with an increase of 33,000 jobs.

  • In February, durable goods manufacturing gained 30,000 jobs with increase in machinery (9,200), fabricated metal products (6,800), primary metals (3,500), transportation equipment (3,400), wood products (3,100), nonmetallic mineral products (1,900), computer and electronic products (1,300), miscellaneous manufacturing (1,000), and electrical equipment and appliances (200). Meanwhile, furniture and related products lost 600 jobs.

  • In February, the employment level in nondurable goods manufacturing sector gained 3000 jobs, with increases in food manufacturing (3,700), beverages and tobacco products (1,700), leather and allied products (800), petroleum and coal products (800), textile mills (600), chemicals (600), paper and paper products (400), and textile product mills (200). Meanwhile, job lost occurred in printing and related support activities (-2,300), plastics and rubber products (-2,100), and apparel (-1,200).

  • The manufacturing employment of 11.7 million workers represents 8.9 percent of total non-farm employment.

    (BLS/DOL Employment data from “The Employment Situation, USDL-11-0271,” released March 4, 2011; next release is April 1, 2011) http://www.bls.gov/news.release/pdf/empsit.pdf

       

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Manufacturing Production updated

  • In February 2011, manufacturing production was up 0.4 percent from previous month and was 6.9 percent above its year-earlier level.

  • Production of durable goods was up 0.9 percent from the previous month. The durable industries that registered increases in output included motor vehicles and parts (4.2 percent), wood products (2.3 percent), furniture and related products (1.4 percent), miscellaneous (1.4 percent), nonmetallic mineral products (1.1 percent), computer and electronic products (1.0 percent), electrical equip., appliances, and components (1.0 percent), aerospace and miscellaneous transportation equipment (0.2 percent), and fabricated metal products (0.2 percent). The durable industries that registered decreases in output included primary metal (-1.1 percent). There was no change in machinery production.

  • There was no change in production of nondurable goods in February. The nondurable manufacturing industries that registered increases in output included textile and product mills (2.5 percent), apparel and leather (0.9 percent), printing and support (0.7 percent), paper (0.7 percent), and petroleum and coal products (0.3 percent). The nondurable industries that registered decreases in output included plastics and rubber products (-0.5 percent), food, beverage, and tobacco products (-0.3 percent), and chemical (-0.2 percent).

  • Other manufacturing industries (non-NAICS) was down 0.8 percent.

    (Federal Reserve Statistical data from “Industrial Production and Capacity Utilization, G17 (419),” released March 17, 2011; next release is April 15, 2011)
    http://www.federalreserve.gov/releases/g17/Current/g17.pdf

       

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Manufacturing Capacity Utilization updated

  • In February 2011, manufacturing industries (NAICS based) operated at 74.7 percent of capacity, 4.2 percentage points below their 1972-2009 average of 78.9 percent and 0.3 percent points higher than their revised capacity utilization level in January 2011.

  • In February 2011, durable manufacturing, capacity utilization operated at 73.5 percent capacity, up 0.7 points from previous month (revised). Increased capacity utilization was registered in motor vehicles and parts (2.5 points), wood products (1.7 points), furniture and related products (1.1 points), miscellaneous (0.8 points), electrical equip., appliances, and components (0.8 points), nonmetallic mineral products (0.8 points), computer and electronic products (0.3 points), fabricated metal products (0.3 points), machinery (0.1 points), and aerospace and miscellaneous transportation equipment (0.1 points). Decreased capacity utilization was registered in primary metal (-0.9 points).

  • In February 2011, non-durable manufacturing, capacity utilization decreased 0.1 percentage points in from previous month (revised) to 76.2 percent. Increased capacity utilization was registered in textile and product mills (1.8 points), apparel and leather (0.8 points), paper (0.6 points), printing and support (0.4 points), and petroleum and coal products (0.3 points). Decreased capacity utilization was registered in food, beverage, and tobacco products (-0.4 points), plastics and rubber products (-0.3 points), and chemical (-0.2 points).

  • The index for other manufacturing industries (non-NAICS) decreased 0.6 points.

    (Federal Reserve Statistical data from “Industrial Production and Capacity Utilization, G17 (419),” released March 17, 2011; next release is April 15, 2011)
    http://www.federalreserve.gov/releases/g17/Current/g17.pdf

       

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Manufacturing Productivity

  • Manufacturing sector productivity (revised) rose 5.9 percent in the fourth-quarter of 2010, as output increased 4.4 percent and hours decreased 1.4 percent. Productivity was up 4.8 percent in the durable goods industries and up 8.0 percent in the nondurable goods industries. Unit labor costs in manufacturing decreased 2.7 percent in the fourth-quarter of 2010 and fell 2.7 percent over the last four quarters.

  • In durable goods industries, productivity (revised) was up 4.8 percent from previous quarter, as output increased 4.7 percent, while hours worked remained the same.

  • In nondurable goods industries, productivity (revised) was up 8.0 percent from previous quarter, as output increased 4.0 percent, while hours worked decreased 3.7 percent.

    (BLS/DOL Productivity data from “Productivity and Costs, Fourth-Quarter and Annual Averages 2010, Revised,” USDL 11-0270, released March 3, 2011; next release is May 5, 2011)
    http://www.bls.gov/news.release/pdf/prod2.pdf

       

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Manufacturing Trade updated

  • Manufactured goods exports in January were 8.2 percent lower than the previous month. Imports were down 3.2 percent.

  • Year to date January 2011, U.S. manufactured goods exports accounted for 76.0 percent of all U.S. exports of goods, compared with 79.9 percent a year ago.

  • The year to date January 2011 trade deficit in manufactured goods of $36.9 billion was $11.4 billion more when compared with $25.5 billion a year ago.

    (Census/BEA/DOC Foreign Trade Statistics data from “U.S. International Trade in Goods and Services, CB11-41, BEA11-09, FT-900(11-01),” released March 10, 2011; next release is April 12, 2011)
    http://www.census.gov/foreign-trade/Press-Release/current_press_release/ft900.pdf

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Manufactured Goods Shipments

  • Shipments of manufactured durable goods in January, up four of the last five months, increased $0.7 billion or 0.3 percent to $202.8 billion, unchanged from the previously published increase. This followed a 2.3 percent December increase.

  • In January, shipments increased in primary metals (4.4 percent), miscellaneous durable goods (2.9 percent), computers and electronic products (2.7 percent), nonmetallic mineral products (2.5 percent), furniture and related products (1.7 percent), electrical equipment, appliances, and components (1.1 percent), and fabricated metal products (0.1 percent). Shipments decreased in machinery (-6.4 percent), transportation equipment (-0.4 percent), and wood products (-0.5 percent).

    (Census Bureau/DOC data from “Full Report on Manufacturers’ Shipments, Inventories and Orders (M3-2(11)-01, CB11-43),” March 4, 2011; next release is March 31, 2011)
    http://www.census.gov/manufacturing/m3/

       

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Manufactured Goods Prices updated

  • In February 2011, the Producer Price Index (PPI) for finished goods, except foods and energy, increased by 0.2 percent compared to previous month.

  • The index for finished energy goods was up 3.3 percent from previous month.

  • A seasonally adjusted increase of price from January to February was registered in home heating oil and distillates (14.6 percent), no. 2 diesel fuel (12.6 percent), gasoline price (3.7 percent), residential gas (3.2 percent), liquefied petroleum gas (3.1 percent), and residential electric power (1.3 percent).

    (BLS/DOL data from “Producer Price Indexes, USDL 11-0349,” released March 16, 2011; next release is April 14, 2011)
    http://www.bls.gov/news.release/pdf/ppi.pdf

       

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Institute for Supply Management's (ISM) Index  

  • Economic activity in the manufacturing sector expanded in February for the 19th consecutive month, and the overall economy grew for the 21st consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®.

  • Manufacturing continued its rapid growth in February as the PMI registered 61.4 percent, an increase of 0.6 percentage point when compared to January's reading of 60.8 percent. This is also the highest PMI reading since May 2004 when the index also registered 61.4 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

  • The percentage-point changes in the components of the PMI in February were: Employment increased 2.8 points to 64.5, Production increased 2.8 points to 66.3, Supplier Deliveries increased 0.8 points to 59.4, and New Orders increased 0.2 points to 68.0. Meanwhile, Inventories decreased 3.6 points to 48.8.

    U.S. Industries Reporting Growth in February 2011

    • Apparel, Leather & Allied Products
    • Petroleum & Coal Products
    • Transportation Equipment
    • Electrical Equipment, Appliances & Components
    • Machinery
    • Chemical Products
    • Fabricated Metal Products
    • Computer & Electronic Products
    • Textile Mills
    • Food, Beverage & Tobacco Products
    • Printing & Related Support Activities
    • Paper Products
    • Wood Products
    • Miscellaneous Manufacturing

    (Institute for Supply Management, data released March 1, 2011; next release is April 1, 2011)
    http://www.ism.ws/ISMReport/MfgROB.cfm?navItemNumber=12942

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Prepared by
Director of Office of Trade Industry Information
Manufacturing and Services
International Trade Administration
U.S. Department of Commerce
(202) 482-4691