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Manufacturing Biweekly Update

September 28, 2012 [past updates]


U.S. Manufacturing Trends Current Period Year-to-Date
Wage Rates no change up
Profits up up
Employment down up
Production down up
Capacity Utilization down up
Productivity up up
Exports down up
Goods Shipments up up


Biweekly Notes

Weak orders point to sharp slowdown in manufacturing

Orders for long-lasting U.S. manufactured goods fell sharply in August, suggesting the main engine of the economic recovery was stalling even as a report showing a drop in new claims for jobless aid offered a hopeful sign on the labor market. While weak demand for aircraft and automobiles accounted for much of the drop in orders last month, the Commerce Department report on Thursday underscored the damage being inflicted by the uncertainty over U.S. fiscal policy, Europe's debt troubles and a slowdown in China. The Commerce Department said durable goods orders dived 13.2 percent, the largest drop since January 2009, when the economy was in the throes of a recession. The decline primarily reflected weak demand for aircraft and automobiles, and transportation orders fell 34.9 percent. Plane maker Boeing reported only one aircraft order last month versus 260 in July. But orders were down for a wide range of goods, and even excluding transportation, orders fell 1.6 percent, dropping for a third consecutive month. The fall was in sync with other data indicating a marked cooling in the production side of the economy.

(Reuters| September 27, 2012)
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Manufacturing Renaissance? Exports, Reshoring Could Bring 5M Jobs to U.S.

An expected surge in exports could help create up to five million U.S. jobs by 2020, according to a report released Friday by the Boston Consulting Group. U.S.-born exports are expected to surge, with domestic manufacturers standing to capture 2% to 7% of Western European and Japanese exports due to lower labor and energy costs, which would translate to as much as $90 billion in additional U.S. exports, BCG research finds. The uptick is production combined with the jobs needed for reshoring could add up to 2.5 million to 5 million jobs by the end of the decade as manufacturers shift production back to the U.S., according to the study. While the return of jobs to U.S. shores, also referred to as insourcing and onshoring, is still a relatively new phenomenon, several large manufacturers have recently announced plans to expand or move production to the country. The reshoring moves come as average manufacturing costs continue to fall in the U.S. BCG estimates that they will be 8% lower than in the U.K. in 2015, 15% lower than in both Germany and France, 21% lower than in Japan and 22% lower than in Italy. China will still be about 7% cheaper than the U.S. but that doesn't include the high cost to ship bulk items around the world. (Foxbusiness| September 21, 2012)
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U.S. Manufacturing Key Facts

Manufacturing Wage Rates

  • In August 2012, average hourly earnings in manufacturing were unchanged from previous month at $19.17, but up 1.27 percent from August 2011’s $18.93.

    (BLS/DOL Employment data from “The Employment Situation, USDL 12-1796,” released September 7, 2012; next release is October 5, 2012)
    http://www.bls.gov/news.release/pdf/empsit.pdf

       

Manufacturing Wage Rates (Quarterly, Yearly)

  • In the second-quarter of 2012, hourly compensation from previous quarter, annual rate (revised) was up (+0.9 percent) in total manufacturing, up (+0.4 percent) in durable manufacturing and up (+2.0 percent) in nondurable manufacturing.

  • In the second-quarter of 2012, hourly compensation of all manufacturing workers increased (+0.4 percent), compared to a (+2.9 percent) increase during the second-quarter of 2011. Real hourly compensation in the total manufacturing sector decreased (-1.4 percent) in the second-quarter of 2012, compared to (-0.4 percent) decrease in the second-quarter of 2011.

    (BLS/DOL Productivity data from “Productivity and Costs, Second Quarter 2012,” USDL 12-1795, released September 5, 2012; next release is November 1, 2012)
    http://www.bls.gov/news.release/pdf/prod2.pdf

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Manufacturing Profits UPDATED

  • In the second quarter of 2012, manufacturing profits increased 2.6 percent, or $9.3 billion, to $372.8 billion from $363.5 billion in the first quarter. Compared with second quarter profits of 2011, manufacturing profits were up $143.6 billion in the second quarter of 2012.

  • Second quarter 2012 profits for all non-financial industries (manufacturing being a subcategory) increased $29.0 billion from the first quarter to $1245.8 billion.

    (BEA/DOC GDP data from “Gross Domestic Product, BEA 12-44,” released September 27, 2012; next release is October 26, 2012)
    http://www.bea.gov/newsreleases/national/gdp/2012/pdf/gdp2q12_3rd.pdf

           

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    Manufacturing Employment

    • In August 2012, manufacturing employment went down, with a decrease of 15,000 jobs.

    • In August, durable goods manufacturing lost 17,000 jobs with decreases in transportation equipment (-8,200), fabricated metal products (-3.100), primary metals (-2,600), computer and electronic products (-1,800), wood products (-1,400), electrical equipment and appliances (-1,300), nonmetallic mineral products (-1,300), and miscellaneous manufacturing (-500). However, job gains were reported in machinery (+1,700), and furniture and related products (+1,600).

    • In August, nondurable goods manufacturing gained 2000 jobs with increases in food manufacturing (+4,800), plastics and rubber products (+800), and printing and related support activities (+200). However, job loss occurred in apparel (-1,500), paper and paper products (-800), textile mills (-600), chemicals (-300), beverages and tobacco products (-300), and petroleum and coal products (-200), textile product mills (-100), and leather and allied products (-100).

    • The manufacturing employment of 12.0 million workers represents 9.0 percent of total non-farm employment.

      (BLS/DOL Employment data from “The Employment Situation, USDL 12-1796,” released September 7, 2012; next release is October 5, 2012) http://www.bls.gov/news.release/pdf/empsit.pdf

           

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    Manufacturing Production

    • In August 2012, manufacturing production was down (-0.7 percent) from previous month and was up (+3.8 percent) above its year-earlier level.

    • In August 2012, production of durable goods was down (-1.1 percent) from the previous month. The durable industries that registered decreases in output included motor vehicles and parts (-4.0 percent), furniture and related products (-1.6 percent), fabricated metal products (-0.8 percent), machinery (-0.8 percent), computer and electronic products (-0.7 percent), miscellaneous manufactured product (-0.6 percent), nonmetallic mineral products (-0.3 percent), aerospace and miscellaneous transportation equipment (-0.2 percent), and wood products (-0.2 percent). The durable industry that registered an increase in output was primary metals (+0.6 percent). There was no change of output in electrical equip., appliances, and components.

    • In August 2012, production of nondurable goods was down (-0.4 percent) from the previous month. The nondurable industries that registered decreases in output included apparel and leather (-1.7 percent), plastics and rubber products (-1.6 percent), textile and product mills (-1.0 percent), petroleum and coal products (-0.5 percent), printing and support (-0.3 percent), chemicals (-0.3 percent), paper (-0.3 percent), and food, beverage and tobacco products (-0.1 percent).

    • In August 2012, production of other manufacturing goods (non-NAICS) was unchanged.

      (Federal Reserve Statistical data from “Industrial Production and Capacity Utilization, G17 (419),” released September 14, 2012; next release is October 16, 2012)
      http://www.federalreserve.gov/releases/g17/Current/g17.pdf

           

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    Manufacturing Capacity Utilization

    • In August 2012, manufacturing industries (NAICS based) operated at 77.6 percent of capacity, down (-0.7 percentage points) below the capacity utilization level of the previous month, and down (-1.1 percentage points) below their 1972-2011 average of 78.7 percent.

    • In August 2012, durable manufacturing, capacity utilization operated at 77.3 percent capacity, down (-1.0 percentage points) from the previous month. Decreased capacity utilization was registered in motor vehicles and parts (-3.5 points), furniture and related products (-1.0 points), machinery (-0.9 points), miscellaneous (-0.9 points), computer and electronic products (-0.9 points), fabricated metal products (-0.7 points), and aerospace and miscellaneous transportation equipment (-0.4 points). Increased capacity utilization was registered in primary metals (+0.5 points). There was no change of capacity utilization in nonmetallic mineral products, electrical equip., appliances, and components, and wood products.

    • In August 2012, non-durable manufacturing, capacity utilization operated 77.9 percent capacity, down (-0.3 points) from the previous month. Decreased capacity utilization was registered in plastics and rubber products (-1.4 points), textile and product mills (-0.6 points), chemicals (-0.3 points), printing and support (-0.2 points), petroleum and coal products (-0.1 points), and food, beverage, and tobacco products (-0.1 points). Increased capacity utilization was registered in apparel and leather (+1.0 points). There was no change of capacity utilization in paper.

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

      (Federal Reserve Statistical data from “Industrial Production and Capacity Utilization, G17 (419),” released September 14, 2012; next release is October 16, 2012)
      http://www.federalreserve.gov/releases/g17/Current/g17.pdf

           

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    Manufacturing Productivity

    • Manufacturing sector productivity was up (+0.1 percent) in the second-quarter of 2012, as output increased (+1.5 percent) and hours increased (+1.4 percent). Productivity was up (+3.7 percent) in the durable goods industries and down (-3.8 percent) in the nondurable goods industries. Unit labor costs in manufacturing increased (+0.8 percent) in the second-quarter of 2012, and decreased (-2.4 percent) over the last four quarters.

    • In durable goods industries, productivity was up (+3.7 percent) from previous quarter, as output increased (+5.4 percent), while hours worked increased (+1.6 percent).

    • In nondurable goods industries, productivity was down (-3.8 percent) from previous quarter, as output decreased (-2.8 percent), and hours worked increased (+1.0 percent).

      (BLS/DOL Productivity data from “Productivity and Costs, Second Quarter 2012,” USDL 12-1795, released September 5, 2012; next release is November 1, 2012)
      http://www.bls.gov/news.release/pdf/prod2.pdf

           

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    Manufacturing Trade

    • Manufactured goods exports in July 2012 were (-8.91 percent) lower than the previous month. Imports were (+0.70 percent) higher.

    • Year-to-date July 2012, U.S. manufactured goods exports accounted for 87.2 percent of all U.S. exports of goods, compared with 85.8 percent a year ago.

    • The year-to-date July 2012 trade deficit in manufactured goods of $258.8 billion was $8.6 billion more when compared with $250.2 billion a year ago.

      (USA Trade Online, U.S. Census Bureau, released September 11, 2012; Next release is October 11, 2012)
      http://www.usatradeonline.gov/

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    Manufactured Goods Shipments

    • Shipments of manufactured durable goods in July, up four of the last five months, increased $5.7 billion or 2.5 percent to $230.7 billion, revised from the previously published 2.6 percent increase. This was at the highest level since the series was first published on a NAICS basis and followed a slight June decrease.

    • In July, shipments increased in transportation equipment (+8.6 percent), primary metals (+1.3 percent), computers and electronic products (+1.1 percent), wood products (+0.9 percent), and nonmetallic mineral products (+0.5 percent). However, shipments decreased in machinery (-0.9 percent), miscellaneous durable goods (-0.7 percent), fabricated metal products (-0.6 percent), and electrical equipment, appliances, and components (-0.4 percent). There was no change in shipment for furniture and related products

      (Census Bureau/DOC data from “Report on Manufacturers’ Shipments, Inventories and Orders (M3-2(12)-7, CB12-163),” August 31, 2012; next release is October 4, 2012)
      http://www.census.gov/manufacturing/m3/

           

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    Manufactured Goods Prices

    • In August 2012, the Producer Price Index (PPI) for finished goods, except foods and energy, increased by 0.2 percent compared to previous month.

    • In August 2012, the Producer Price Index (PPI) for finished goods, except foods and energy, increased by 0.2 percent compared to previous month.

    • A seasonally adjusted increase in price from July to August was registered in gasoline (+13.6 percent), liquefied petroleum gas (+11.9 percent), home heating oil and distillates (+10.8 percent), no. 2 diesel fuel (+4.9 percent), residential gas (+1.0 percent), and residential electric power (+0.4 percent).

      (BLS/DOL data from “Producer Price Indexes, USDL 12-1833,” released September 13, 2012; next release is October 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 contracted in August for the third time since July 2009; however, the overall economy grew for the 39th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®.

    • Manufacturing contracted in August as the PMI™ registered 49.6 percent, a decrease of 0.2 percentage point when compared to July's reading of 49.8 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 August were Inventories, +4.0 points increase to 53.0; Supplier Deliveries, +0.6 points increase to 49.3; Production, -4.1 points decrease to 47.2; New Orders -0.9 points decrease to 47.1; and Employment, -0.4 points decrease to 51.6.

      U.S. Industries Reporting Growth in August 2012

      • Printing & Related Support Activities
      • Primary Metals
      • Food, Beverage & Tobacco Products
      • Petroleum & Coal Products
      • Apparel, Leather & Allied Products
      • Paper Products
      • Chemical Products
      • Miscellaneous Manufacturing

      (Institute for Supply Management, data released September 4, 2012; next release is October 1 4, 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