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Manufacturing Biweekly Update

October 1, 2010 [past updates]


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


Biweekly Notes

US manufacturing Growth Slows in September: ISM

US manufacturing activity grew more weakly than predicted in September and the slowdown is expected to continue in the fourth quarter, a key survey showed Friday. The Institute of Supply Management said its purchasing managers index (PMI) on economic activity in the manufacturing sector rose to 54.4 percent in September, the 14th consecutive month of expansion. The growth was worse than the 55.0 percent rise expected by most analysts, and decelerated from a 56.3 percent reading in August. "While the headline number shows relative strength this month as the PMI reading of 54.4 percent is still quite positive, the overall picture is less encouraging," Norbert Ore, head of the ISM business survey committee, said in a statement. Growth of new orders continued to slow, while production was growing at a faster rate than new orders.

(AFP |news.yahoo.com|October 1, 2010)
news.yahoo.com

Factory jobs post surprising strength
As the labor market continues to struggle, one surprising bright spot stands out amid the list of battered industries -- factory jobs. Manufacturing employment began its decline long before the recession, losing jobs every year since 1998. But since the start of this year, there's been a 1.6% gain in manufacturing jobs -- about twice the pace of growth in other private sector jobs. Even if manufacturing hiring stays flat the rest of this year, the industry is poised to post its biggest percentage gain in jobs since 1994. "In 2008 and 2009, manufacturers would not hire," said Norbert Ore, head of the Institute for Supply Management's survey of manufacturers. "Today they're willing to fill openings, willing to hire. Here and there, they're adding a shift." About 26% of manufacturing companies surveyed by ISM reported adding staff, compared to only 5% cutting workers. Only 13% of service sector employers said they were adding workers, while 18% are still cutting jobs.

(Bloomberg|September 16, 2010)
finance.yahoo.com

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U.S. Manufacturing Key Facts

Manufacturing Wage Rates

  • In August 2010, average hourly earnings in manufacturing were $18.57 (preliminary), up 0.05 percent from July 2010’s $18.56 (preliminary), and up 1.4 percent from August 2009’s $18.31.
       

(BLS/DOL Employment data from “The Employment Situation, USDL 10-1212,” released September 3, 2010; next release is October 8, 2010)
http://www.bls.gov/news.release/pdf/empsit.pdf

Manufacturing Wage Rates (Quarterly, Yearly)

  • During the second quarter of 2010, hourly compensation from previous quarter, annual rate (revised) was down 2.0 percent in total manufacturing, down 1.9 percent in durable manufacturing and down 2.1 percent in nondurable manufacturing.

  • In the second quarter of 2010, hourly compensation of all manufacturing workers decresed 0.3 percent (revised), compared to a 5.9 percent increase during the second quarter of 2009. Real hourly compensation in the total manufacturing sector decreased 2.1 percent (revised) in the second quarter of 2010, compared to 7.0 percent increase in the second quarter of 2009.

    (BLS/DOL Productivity data from “Productivity and Costs, Second Quarter 2010, Revised,” USDL 10-1211, released September 2, 2010; next release is November 4, 2010)
    http://www.bls.gov/news.release/pdf/prod2.pdf

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Manufacturing Profits updated

  • In the second quarter of 2010, manufacturing profits increased 10.7 percent, or $26.7 billion, to $277.1 billion from $250.4 billion in the first quarter. Compared with second quarter profits of 2009, manufacturing profits were up $137.4 billion in the second quarter of 2010.

  • Second quarter 2010 profits for all non-financial industries (manufacturing being a subcategory) increased 4.9 percent from the first quarter of 2010 to $1034.0 billion.

    (BEA/DOC GDP data from “Gross Domestic Product and Corporate Profits, BEA 10-47,”released September 30, 2010; next release is October 29, 2010)
    http://www.bea.gov/newsreleases/national/gdp/2010/pdf/gdp2q10_3rd.pdf

       

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Manufacturing Employment

  • In August, 2010, manufacturing employment went down, with a decrease of 27,000 jobs.

  • In August, durable goods manufacturing lost 24,000 jobs, with decreases in transportation equipment (-21,400), wood products (-3,000), fabricated metal products (-1,700), furniture and related products (-1,000), machinery (-900), nonmetallic mineral products (-800), and miscellaneous manufacturing (-300). Job gains occurred in computer and electronic products (2,600), electrical equipment and appliances (900), and primary metals (700).

  • In August, nondurable goods manufacturing lost 3,000 jobs, with decreases in printing and related support activities (-2,700), textile mills (-1,800), food manufacturing (-1,300), petroleum and coal products (-300), textile product mills (-200), and chemicals (-100). Meanwhile, job gains occurred in plastics and rubber products (1,600), leather and allied products (900), apparel (400), beverages and tobacco product (400), and paper and paper products (300).

  • The manufacturing employment of 11.7 million workers represents 9.0 percent of total non-farm employment.

    (BLS/DOL Employment data from “The Employment Situation, USDL-10-1212,” released September 3, 2010; next release is October 8, 2010) http://www.bls.gov/news.release/pdf/empsit.pdf

       

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Manufacturing Production

  • In August 2010, manufacturing production was up 0.2 percent from previous month and was 6.3 percent above its year-earlier level.

  • Production of durable goods was down 0.1 percent from previous month. The durable manufacturing industries that registered increases in output included electrical equip., appliances and components (1.7 percent), wood products (1.2 percent), fabricated metal products (1.2 percent), primary metal (1.0 percent), computer and electronic products (0.7 percent), machinery (0.4 percent), and aerospace and miscellaneous transportation equipment (0.4 percent). The durable industry that registered decreases in output included motor vehicles and parts (-5.0 percent), furniture and related products (-1.8 percent), miscellaneous (-0.7 percent), and nonmetallic mineral products (-0.3 percent).

  • The production of nondurable goods was up 0.5 percent from previous month. The nondurable manufacturing industries that registered increases in output included apparel and leather (1.4 percent), food, beverage, and tobacco products (1.2 percent), printing and support (0.6 percent), chemical (0.6 percent), plastics and rubber products (0.2 percent), and paper (0.1 percent). The nondurable industry that registered decreases in output included petroleum and coal products (-1.7 percent), and textile and product mills (-0.3 percent).

  • The index for other manufacturing industries (non-NAICS) was up 0.9 percent from the previous month.

    (Federal Reserve Statistical data from “Industrial Production and Capacity Utilization, G17 (419),” released September 15, 2010; next release is October 18, 2010)
    http://www.federalreserve.gov/releases/g17/Current/g17.pdf

       

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Manufacturing Capacity Utilization

  • In August 2010, manufacturing industries (NAICS based) operated at 72.3 percent of capacity, 6.7 percentage points below their 1972-2009 average of 79.0 percent and 0.1 percent points higher than their revised capacity utilization level in July 2010.

  • In durable manufacturing, capacity utilization operated at 70.3 percent capacity, down 0.1 points from July (revised). Increased capacity utilization was registered in electrical equip., appliances,and components (1.3 points), wood products (1.1 points), fabricated metal products (1.0 points), primary metal (0.5 points), machinery (0.4 points), aerospace and miscellaneous transportation equipment (0.2 points), and computer and electronic products (0.1 points). Decreased capacity utilization was demonstrated in motor vehicles and parts (-3.2 points), furniture and related products (-1.0 points), miscellaneous (-0.7 points), and nonmetallic mineral products (-0.1 points).

  • In non-durable manufacturing, capacity utilization increased 0.4 percentage points in from July (revised) to 74.7 percent. Increased capacity utilization was registered in apparel and leather (1.6 points), food, beverage, and tobacco products (0.9 points), printing and support (0.5 points), chemical (0.5 points), paper (0.2 points), textile and product mills (0.1 points), and plastics and rubber products (0.1 points). Decreased capacity utilization was only registered in petroleum and coal products (-1.4 points).

  • The index for other manufacturing industries (non-NAICS) increased 0.6 points from previous month.

    (Federal Reserve Statistical data from “Industrial Production and Capacity Utilization, G17 (419),” released September 15, 2010; next release is October 18, 2010)
    http://www.federalreserve.gov/releases/g17/Current/g17.pdf

       

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Manufacturing Productivity

  • Manufacturing sector productivity (revised) rose 4.1 percent in the second quarter of 2010, as output increased 8.4 percent and hours increased 4.1 percent. Productivity grew 9.9 percent in the durable goods industries and shrank 2.4 percent in the nondurable goods industries. Unit labor costs in manufacturing declined 5.9 percent in the second quarter of 2010 and fell 7.3 percent over the last four quarters.

  • In durable goods industries, productivity (revised) grew 9.9 percent from previous quarter, annual rate in the second quarter of 2010, as output increased 13.6 percent, while hours worked also increased 3.4 percent.

  • In nondurable goods industries, productivity (revised) fell 2.4 percent from previous quarter, annual rate in the second quarter of 2010, as output increased 2.8 percent, while hours worked also increased 5.3 percent.

    (BLS/DOL Productivity data from “Productivity and Costs, Second Quarter 2010 Revised,” USDL 10-1211, released September 2, 2010; next release is November 4, 2010)
    http://www.bls.gov/news.release/pdf/prod2.pdf

       

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Manufacturing Trade

  • Year to date July 2010, U.S. manufactured goods exports accounted for 80.9 percent of all U.S. exports of goods, compared with 82.0 percent a year ago.

  • Manufactured goods exports in July were 4.0 percent lower than the previous month. Imports were down 3.7 percent.

  • The year to date July 2010 trade deficit in manufactured goods of $214.5 billion was $43.8 billion more when compared with $170.7 billion a year ago.

    (Census/BEA/DOC Foreign Trade Statistics data from “U.S. International Trade in Goods and Services, CB10-135, BEA10-43, FT-900(10-07),” released September 9, 2010; next release is October 14, 2010)
    http://www.census.gov/foreign-trade/Press-Release/current_press_release/ft900.pdf

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Manufactured Goods Shipments updated

  • Shipments of manufactured durable goods in August, down following two consecutive monthly increases, decreased $3.1 billion or 1.5 percent to $197.9 billion. This followed a 2.5 percent July increase.

  • In August, shipments increased in machinery (3.9 percent), fabricated metal products (0.4 percent), electrical equipment, appliances, components (0.2 percent), and primary metals (0.1 percent). Shipment decreased in transportation equipment (-5.9 percent), and computer and electronic products (-2.1 percent).

    (Census Bureau/DOC data from “Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders (M3-1(10)-08, CB10-148),”September 24, 2010; next release is October 27, 2010)
    http://www.census.gov/manufacturing/m3/

       

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Manufactured Goods Prices

  • In August 2010, the Producer Price Index (PPI) for finished goods, except foods and energy, increased by 0.1 percent compared to previous month.

  • The index for finished energy goods was up 2.2 percent from previous month.

  • A seasonally adjusted increase of price from July to August was registered in gasoline price (7.5 percent), home heating oil and distillates (7.0 percent), No. 2 diesel fuel (6.4 percent), liquefied petroleum gas (5.9 percent), residential gas (1.4 percent), and residential electric power (0.6 percent).

    (BLS/DOL data from “Producer Price Indexes, USDL 10-1280,” released September 16, 2010; next release is October 14, 2010)
    http://www.bls.gov/news.release/pdf/ppi.pdf

       

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Institute for Supply Management's (ISM) Index  updated

  • Economic activity in the manufacturing sector expanded in September for the 14th consecutive month, and the overall economy grew for the 17th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®.

  • Manufacturing continued to grow in September, but at a slower rate as the PMI registered 54.4 percent, a decrease of 1.9 percentage points when compared to August's reading of 56.3 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 September were: Production decreased 3.4 points to 56.5, Employment down 3.9 points to 56.5, Inventories up 4.2 points to 55.6, Supplier Deliveries down 4.3 points to 52.3, and New Orders decreased 2.0 points to 51.1.

    U.S. Industries Reporting Growth in September 2010

    • Apparel, Leather & Allied Products
    • Fabricated Metal Products
    • Electrical Equipment, Appliances & Components
    • Primary Metals
    • Miscellaneous Manufacturing
    • Transportation Equipment
    • Computer & Electronic Products
    • Furniture & Related Products
    • Plastics & Rubber Products
    • Chemical Products
    • Paper Products
    • Machinery
    • Food, Beverage & Tobacco Products

    (Institute for Supply Management, data released October 1, 2010; next release is November 1, 2010)
    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