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Manufacturing Biweekly Update

March 30, 2012 [past updates]


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


Biweekly Notes

Job growth expected from cheap natural gas

The nation's fast-growing supply of cheap natural gas is setting off a manufacturing revival that's expected to create hundreds of thousands of jobs as companies build or expand plants to take advantage of the low prices. Royal Dutch Shell announced this month that it chose a site near Pittsburgh for a facility to convert ethane from locally produced natural gas into ethylene and polyethylene. They're used to make plastics that go into packaging, pipes and other products. The planned ethane cracker would employ a few hundred workers. It's among nearly 30 chemical plants proposed in the U.S. in the next five years, according to the American Chemistry Council. The projects would expand U.S. petrochemical capacity by 27% and employ 200,000 workers at the factories and related suppliers, says Council President Cal Dooley, a major turnaround.
(USA Today |March 27, 2012)
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More manufacturing work returns to U.S. shores

In a corner of a manufacturing plant in St. Charles, a dozen workers steadily assembled electric motors that until December were produced in China. The Bison Gear & Engineering Corp. workers inserted copper wires, tested the assembly and then readied them for the next step, the addition of a gearbox. At one time it made sense for Bison to import motors from China, but no longer. While data is scant, manufacturing experts say the number of companies shifting production to the U.S. will increase over the next five years as Chinese wages continue to increase at the same time transportation costs soar. A Boston Consulting Group report released last week predicts that by 2015 it will become cheaper to produce certain products in the U.S. that are sold to American consumers. The products, the report said, would span a half-dozen industries and include everything from machinery to electronics to furniture. According to the Boston Consulting report, the shift to U.S. manufacturing, combined with an increase in exports due to improved U.S. competitiveness, will create 2 million to 3 million jobs. President Barack Obama is seeking to accelerate the shift by proposing a 20 percent income tax credit for companies that bring jobs back to the U.S.
(Chicago Tribune| March 27, 2012)
[Read More]

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U.S. Manufacturing Key Facts

Manufacturing Wage Rates

  • In February 2012, average hourly earnings in manufacturing were $19.04 (preliminary), unchanged from previous month, but up 0.85 percent from February 2011’s $18.88.

    (BLS/DOL Employment data from “The Employment Situation, USDL 12-0402,” released March 9, 2012; next release is April 6, 2012)
    http://www.bls.gov/news.release/pdf/empsit.pdf

       

Manufacturing Wage Rates (Quarterly, Yearly)

  • In the fourth-quarter of 2011, hourly compensation from previous quarter, annual rate (revised) was up 1.9 percent in total manufacturing, up 0.6 percent in durable manufacturing and up 3.8 percent in nondurable manufacturing.

  • In the fourth-quarter of 2011, hourly compensation of all manufacturing workers increased 1.7 percent, compared to a 1.2 percent increase during the fourth-quarter of 2010. Real hourly compensation in the total manufacturing sector decreased -1.6 percent in the fourth-quarter of 2011, compared with no change in the fourth-quarter of 2010.

    (BLS/DOL Productivity data from “Productivity and Costs, Fourth Quarter 2011, Revised” USDL 12-0401, released March 7, 2012; next release is May 3, 2012)
    http://www.bls.gov/news.release/pdf/prod2.pdf

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Manufacturing Profits UPDATED

  • In the fourth quarter of 2011, manufacturing profits increased 4.10 percent, or $11.0 billion, to $279.2 billion from $268.2 billion in the first quarter. Compared with fourth quarter profits of 2010, manufacturing profits were up $91.5 billion in the fourth quarter of 2011

  • Fourth quarter 2011 profits for all non-financial industries (manufacturing being a subcategory) increased $30.1 billion from the third quarter of 2011 to $998.0 billion.

    (BEA/DOC GDP data from “Gross Domestic Product, BEA 12-11,” released March 29, 2012; next release is April 27, 2012)
    http://www.bea.gov/newsreleases/national/gdp/2011/pdf/gdp3q11_3rd.pdf

       

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Manufacturing Employment

  • In February 2012, manufacturing employment went up, with an increase of 31,000 jobs.

  • In February, durable goods manufacturing gained 31,000 jobs with increases in fabricated metal products (11,400), transportation equipment (8,300), machinery (4,500), furniture and related products (3,100), electrical equipment and appliances (2,000), nonmetallic mineral products (1,900), primary metals (1,200), and wood products (1,100). However, job loss occurred in miscellaneous manufacturing (-1,600), and computer and electronic products (-600).

  • In February, there was no change of employment in nondurable goods manufacturing. However, jobs increased in beverages and tobacco products (2,300), plastics and rubber products (1,700), food manufacturing (1,200), and textile product mills (500). However, job losses occurred in printing and related support activities (-2,500), paper and paper products (-1,300), chemicals (-900), petroleum and coal products (-600), apparel (-300), leather and allied products (-100), and textile mills (-100).

  • The manufacturing employment of 11.9 million workers represents 9.0 percent of total non-farm employment.

    (BLS/DOL Employment data from “The Employment Situation, USDL 12-0402,” released March 9, 2012; next release is April 6, 2012) http://www.bls.gov/news.release/pdf/empsit.pdf

       

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Manufacturing Production

  • In February 2012, manufacturing production was up 0.3 percent from previous month and was 5.1 percent above its year-earlier level.

  • Production of durable goods was up 0.4 percent from the previous month. The durable industries that registered increases in output included fabricated metal products (1.8 percent), electrical equip., appliances, and components (1.6 percent), aerospace and miscellaneous transportation equipment (1.6 percent) nonmetallic mineral products (1.2 percent), furniture and related products (0.4 percent), miscellaneous (0.4 percent), computer and electronic products (0.2 percent), and wood products (0.1 percent). The durable industries that registered decreases in output included primary metals (-1.2 percent), motor vehicles and parts (-1.1 percent), and machinery (-0.3 percent).

  • Production of nondurable goods was up -0.1 percent from the previous month. The nondurable manufacturing industries that registered increases in output included petroleum and coal products (1.4 percent), plastics and rubber products (1.3 percent), paper (0.7 percent), textile and product mills (0.4 percent), and food, beverage and tobacco products (0.3 percent). The nondurable industries that registered decreases in output included chemicals (-0.8 percent), and apparel and leather (-0.7 percent). There was no change of production in printing and support.

  • Other manufacturing industries (non-NAICS) was down (-0.3 percent).

    (Federal Reserve Statistical data from “Industrial Production and Capacity Utilization, G17 (419),” released March 16, 2012; next release is April 17, 2012)
    http://www.federalreserve.gov/releases/g17/Current/g17.pdf

       

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Manufacturing Capacity Utilization

  • In February 2012, manufacturing industries (NAICS based) operated at 77.9 percent of capacity, 0.2 percent above the revised capacity utilization level from previous month, and 0.8 percentage points below their 1972-2011 average of 78.7 percent.

  • In February 2012, durable manufacturing, capacity utilization operated at 77.6 percent capacity, up 0.2 points from previous month. Increased capacity utilization was registered in fabricated metal products (1.6 points), electrical equip., appliances, and components (1.4), aerospace and miscellaneous transportation equipment (1.2 points), nonmetallic mineral products (0.9 points), furniture and related products (0.4 points), wood products (0.2 points), and miscellaneous (0.1 points). Decreased capacity utilization was registered in motor vehicles and parts (-0.8 points), primary metals (-0.8 points), computer and electronic products (-0.4 points), and machinery (-0.3 points).

  • In February 2012, non-durable manufacturing, capacity utilization operated 78.3 percent capacity, up 0.1 percent from the previous month. Increased capacity utilization was registered in petroleum and coal products (1.1 points), plastics and rubber products (0.9 points), paper (0.7 points), textile and product mills (0.4 points), printing and support (0.1 points), and food, beverage, and tobacco products (0.1 points). Decreased capacity utilization was registered in chemicals (-0.8 points), and apparel and leather (-0.4 points).

  • The index for other manufacturing industries (non-NAICS) was down (-0.1 points).

    (Federal Reserve Statistical data from “Industrial Production and Capacity Utilization, G17 (419),” released March 16, 2012; next release is April 17, 2012)
    http://www.federalreserve.gov/releases/g17/Current/g17.pdf

       

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Manufacturing Productivity

  • Manufacturing sector productivity was down (-0.1 percent) in the fourth-quarter of 2011, as output increased (4.8 percent) and hours increased (4.9 percent). Productivity was up (0.8 percent) in the durable goods industries and up (0.5 percent) in the nondurable goods industries. Unit labor costs in manufacturing increased (2.0 percent) in the fourth-quarter of 2011, and there was no change over the last four quarters.

  • In durable goods industries, productivity was up (0.8 percent) from previous quarter, as output increased (8.5 percent), while hours worked increased (7.6 percent).

  • In nondurable goods industries, productivity was up (0.5 percent) from previous quarter, as output increased (1.2 percent), and hours worked increased (0.7 percent).

    (BLS/DOL Productivity data from “Productivity and Costs, Fourth-Quarter 2011, Revised,” USDL 12-0401, released March 7, 2012; next release is May 3, 2012)
    http://www.bls.gov/news.release/pdf/prod2.pdf

       

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Manufacturing Trade

  • Manufactured goods exports in January 2012 were 6.88 percent lower than the previous month. Imports were 0.09 percent lower.

  • In 2012, U.S. manufactured goods exports accounted for 85.9 percent of all U.S. exports of goods, compared with 83.8 percent a year ago.

  • The 2012 trade deficit in manufactured goods of $40.0 billion was $3.6 billion more when compared with $36.4 billion a year ago.

    (USA Trade Online, U.S. Census Bureau, released March 9, 2012; Next release is April 12, 2012)
    http://www.usatradeonline.gov/

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Manufactured Goods Shipments UPDATED

  • Shipments of manufactured durable goods in February, down following two consecutive monthly increases, decreased $0.8 billion or 0.4 percent to $206.6 billion. This followed a 0.1 percent January increase.

  • In February, shipments increased in machinery (+2.3 percent), computers and electronic products (+1.0 percent), and primary metals (+0.5 percent). However, shipment decreased in transportation equipment (-2.5 percent), electrical equipment, appliances, and components (-1.4 percent), and fabricated metal products (-0.4 percent). (Note: This update covers advance report of shipment for some industries. The full shipment report is due to be released on April 3.)

    (Census Bureau/DOC data from “Report on Manufacturers’ Shipments, Inventories and Orders (M3-1(12)-2, CB12-48),” March 28, 2012; next release is April 3, 2012)
    http://www.census.gov/manufacturing/m3/

       

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Manufactured Goods Prices

  • In February 2012, 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 1.3 percent from previous month.

  • A seasonally adjusted decrease in price from January to February was registered in liquefied petroleum gas (-14.0 percent), and residential gas (-2.8 percent). An increase in price was registered in home heating oil and distillates (+5.3 percent), gasoline price (+4.3 percent), no. 2 diesel fuel (+4.1 percent), and residential electric power (+0.6 percent).

    (BLS/DOL data from “Producer Price Indexes, USDL 12-0451,” released March 15, 2012; next release is April 12, 2012)
    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 31st consecutive month, and the overall economy grew for the 33rd consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®.

  • Manufacturing continued its growth in February as the PMI registered 52.4 percent, a decrease of 1.7 percentage points when compared to January's reading of 54.1 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 Supplier Deliveries, -4.6 points decrease to 49.0; New Orders -2.7 points decrease to 54.9; Employment, -1.1 points decrease to 53.2; Production, -0.4 points decrease to 55.3. There was no change in Inventories at 49.5;

    U.S. Industries Reporting Growth in February 2012

    • Apparel, Leather & Allied Products
    • Machinery
    • Primary Metals
    • Transportation Equipment
    • Petroleum & Coal Products
    • Fabricated Metal Products
    • Paper Products
    • Computer & Electronic Products
    • Food, Beverage & Tobacco Products
    • Miscellaneous Manufacturing
    • Chemical Products

    (Institute for Supply Management, data released March 1, 2012; next release is April 2, 2012)
    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