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Manufacturing Biweekly Update

March 2, 2012 [past updates]


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


Biweekly Notes

U.S. manufacturing growth cools, real spending stagnant

Growth in U.S. manufacturing unexpectedly cooled in February and consumer spending was flat in January for the third straight month after accounting for inflation, casting a pall over the economic outlook. The Institute for Supply Management said on Thursday its index of national factory activity fell to 52.4 last month from 54.1 the month before. The reading was shy of expectations of 54.5. U.S. manufacturing has been a bright spot in the global economy but the ISM data gave a tentative sign that headwinds overseas could be catching up with American manufacturers. While an improved jobs market - new jobless claims were near four-year lows last week - appears to be boosting U.S. incomes, the Commerce Department said inflation and taxes gobbled up the gains in January.
(Reuters |March 1, 2012)
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Companies Move Manufacturing Jobs Back to America

A factory sits empty. It’s not in the Rust Belt, nor is it part of a manufacturing exodus that has cost the U.S. thousands of jobs. It is a factory in Shenzhen, China, and the American company that once employed Chinese workers is now packing up, coming home and bringing the jobs with them. A decade ago, a factory worker in China made 58 cents an hour. Today, wages are more than $ 3.00 and there are predictions of $6.00 an hour by the year 2015. It may sound cheap, but some economists argue when you factor in productivity those wages add up. The Boston Consulting Group argues the American worker combined with technology in the U.S. makes the American worker more than three times as productive as the Chinese worker. Master Lock in Milwaukee, Wis., sent as many as 1,000 jobs overseas in the 1990s and just brought back the first 100. Nat Labs is doing the same; it’s now making dental molds in Florida instead of China and hopes to hire 300 people. The story is true in Detroit too, where GalaxE.Solutions, a custom software development company, decided to move in, taking over an office building that had been vacant for nearly a decade. Detroit, of course, is much closer to the company’s American clients than are the workers in Bangalore, India. Even though a worker in Bangalore makes $20,000 a year and an American worker doing the same job makes between $40,000 and $60,000, CEO Tim Bryan said once other costs are factored in, the economics make balance out. “This work is coming back to the U.S.; there’s no stopping it,” he said.
(ABC News| February 22, 2012)
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U.S. Manufacturing Key Facts

Manufacturing Wage Rates

  • In January 2012, average hourly earnings in manufacturing were $19.08 (preliminary), up 0.1 percent from previous month, and up 1.06 percent from January 2011’s $18.88.

    (BLS/DOL Employment data from “The Employment Situation, USDL 12-0163,” released February 3, 2012; next release is March 9, 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 (preliminary) was up 1.2 percent in total manufacturing, up 0.2 percent in durable manufacturing and up 2.7 percent in nondurable manufacturing.

  • In the fourth-quarter of 2011, hourly compensation of all manufacturing workers increased 0.6 percent, compared to a 1.2 percent increase during the fourth-quarter of 2010. Real hourly compensation in the total manufacturing sector decreased -2.6 percent in the fourth-quarter of 2011, compared with change in the fourth-quarter of 2010.

    (BLS/DOL Productivity data from “Productivity and Costs, Fourth Quarter 2011, Preliminary” USDL 12-0162, released February 2, 2012; next release is March 7, 2012)
    http://www.bls.gov/news.release/pdf/prod2.pdf

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Manufacturing Profits

  • In the third quarter of 2011, manufacturing profits increased 7.32 percent, or $18.3 billion, to $268.2 billion from $249.9 billion in the first quarter. Compared with third quarter profits of 2010, manufacturing profits were up $41.0 billion in the third quarter of 2011.

  • Third quarter 2011 profits for all non-financial industries (manufacturing being a subcategory) increased $22 billion from the second quarter of 2011 to $967.9 billion.

    (BEA/DOC GDP data from “Gross Domestic Product, BEA 11-63,” released December 22, 2011; next release is March 29, 2011)
    http://www.bea.gov/newsreleases/national/gdp/2011/pdf/gdp3q11_3rd.pdf

       

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Manufacturing Employment

  • In January 2012, manufacturing employment went up, with an increase of 50,000 jobs.

  • In January, durable goods manufacturing gained 44,000 jobs with increases in fabricated metal products (10,900), machinery (10,500), transportation equipment (10,300), miscellaneous manufacturing (5,300), wood products (3,100), nonmetallic mineral products (2,300), primary metals (1,700), furniture and related products (1,500), and electrical equipment and appliances (900). However, job loss occurred in computer and electronic products (-1,900).

  • In January, nondurable goods manufacturing gained 6000 jobs with increases in chemicals (2,200), printing and related support activities (1,700), beverages and tobacco products (1,300), petroleum and coal products (1,100), textile mills (700), leather and allied products (500), and apparel (100). However, job loss occurred in plastics and rubber products (-1,000), paper and paper products (-800), and textile product mills (-300). Meanwhile, there was no change of employment in food manufacturing.

  • 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 12-0163,” released February 3, 2012; next release is March 9, 2012) http://www.bls.gov/news.release/pdf/empsit.pdf

       

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Manufacturing Production

  • In January 2012, manufacturing production was up 0.7 percent from previous month and was 4.5 percent above its year-earlier level.

  • Production of durable goods was up 1.8 percent from the previous month. The durable industries that registered increases in output included fabricated metal products (1.2 percent), machinery (2.2 percent), computer and electronic products (1.4 percent), electrical equip., appliances, and components (1.4 percent), motor vehicles and parts (6.8 percent), miscellaneous (2.0 percent), and aerospace and miscellaneous transportation equipment (.1 percent) and furniture and related products (1.1 percent). The durable industries that registered decreases in output included wood products (-1.5 percent), nonmetallic mineral products (-1.1 percent), primary metals (-.6 percent).

  • • Production of nondurable goods was down -.2 percent from the previous month. The nondurable manufacturing industries that registered increases in output included textile and product mills (.2 percent), apparel and leather (1.9 percent), paper (.7 percent), printing and support (1.2 percent), chemicals (.3 percent), and plastics and rubber products (.4 percent), The nondurable industries that registered decreases in output included food, beverage and tobacco products (-0.6 percent), petroleum and coal products (-2.3 percent).

  • • Other manufacturing industries (non-NAICS) was down (-.1 percent).

    (Federal Reserve Statistical data from “Industrial Production and Capacity Utilization, G17 (419),” released February 15, 2012; next release is March 16, 2012)
    http://www.federalreserve.gov/releases/g17/Current/g17.pdf

       

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Manufacturing Capacity Utilization

  • In January 2012, manufacturing industries (NAICS based) operated at 77.4 percent of capacity, 1.3 percentage points below their 1972-2011 average of 78.7 percent, and 0.5 percent above the revised capacity utilization level in December 2011.

  • In January 2012, durable manufacturing, capacity utilization operated at 77.0 percent capacity, up 1.3 points from previous month. Increased capacity utilization was registered in fabricated metal products (.9 points), machinery (1.7 points), computer and electronic products (0.6 points), electrical equip., appliances, and components (1.1), motor vehicles and parts (4.6 points), furniture and related products (.9 points), fabricated metal products (.9 points), miscellaneous (1.3 points), and computer and electronic products (0.6 points). Decreased capacity utilization was registered in wood products (-.9 points), and nonmetallic mineral products (-0.4 points), and primary metals (-.4 points) There was no change in capacity utilization for aerospace and miscellaneous transportation equipment for the month.

  • In December 2012, non-durable manufacturing, capacity utilization operated 78.0 percent capacity, down 0.2 percent from the previous month. Increased capacity utilization was registered in textile and product mills (0.2 points), apparel and leather (1.3 points), in paper (0.7 points), printing and support (0.9 points), chemicals (0.2 points), and plastics and rubber products (.2 points). Decreased capacity utilization was registered in food, beverage, and tobacco products (-0.5 points) and petroleum and coal products (-2.1 points).

  • The index for other manufacturing industries (non-NAICS) was unchanged.

    (Federal Reserve Statistical data from “Industrial Production and Capacity Utilization, G17 (419),” released February 15, 2011; next release is March 16, 2011)
    http://www.federalreserve.gov/releases/g17/Current/g17.pdf

       

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Manufacturing Productivity

  • Manufacturing sector productivity was down (-0.4 percent) in the fourth-quarter of 2011, as output increased (3.8 percent) and hours increased (4.2 percent). Productivity was down (-0.4 percent) in the durable goods industries and up (1.3 percent) in the nondurable goods industries. Unit labor costs in manufacturing increased (1.6 percent) in the fourth-quarter of 2011, and decreased (-1.1 percent) over the last four quarters.

  • In durable goods industries, productivity was down (-0.4 percent) from previous quarter, as output increased (6.3 percent), while hours worked increased (6.7 percent).

  • In nondurable goods industries, productivity was up (1.3 percent) from previous quarter, as output increased (1.5 percent), and hours worked increased (0.2 percent).

    (BLS/DOL Productivity data from “Productivity and Costs, Fourth-Quarter 2011, Preliminary,” USDL 12-0162, released February 2, 2012; next release is March 7, 2012)
    http://www.bls.gov/news.release/pdf/prod2.pdf

       

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Manufacturing Trade

  • Manufactured goods exports in December 2011 were 1.27 percent higher than the previous month. Imports were 5.30 percent lower.

  • In 2011, U.S. manufactured goods exports accounted for 85.6 percent of all U.S. exports of goods, compared with 86.1 percent a year ago.

  • The 2011 trade deficit in manufactured goods of $448.7 billion was $36.7 billion more when compared with $412.0 billion a year ago.

    (USA Trade Online, U.S. Census Bureau, released February 10, 2012; Next release is March 09, 2012)
    http://www.usatradeonline.gov/

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Manufactured Goods Shipments UPDATED

  • Shipments of manufactured durable goods in January, up two consecutive months, increased $0.8 billion or 0.4 percent to $207.8 billion. This followed a 1.9 percent December increase.

  • In January, shipments increased in transportation equipment (+5.4 percent), electrical equipment, appliances, and components (+1.3 percent), fabricated metal products (+0.6 percent), and computers and electronic products (+0.3 percent). However, shipments decreased in machinery (-5.7 percent), and primary metals (-2.7 percent). (Note: This update covers shipment for some industries. The full shipment report is due to be released on March 5.)

    (Census Bureau/DOC data from “Advance Report on Manufacturers’ Shipments, Inventories and Orders (M3-1(12)-1, CB12-35),” February 28, 2012; next release is March 5, 2012)
    http://www.census.gov/manufacturing/m3/

       

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Manufactured Goods Prices

  • In January 2012, the Producer Price Index (PPI) for finished goods, except foods and energy, increased by 0.4 percent compared to previous month.

  • The index for finished energy goods was down 0.5 percent from previous month.

  • A seasonally adjusted decrease in price from December to January was registered in residential electric power (-1.7 percent), home heating oil and distillates (-2.9 percent), residential gas (-3.4 percent), and liquefied petroleum gas (-2.3 percent). An increase in price was registered in no. 2 diesel fuel (5.2 percent), and gasoline price (2.0 percent).

    (BLS/DOL data from “Producer Price Indexes, USDL 12-0060,” released February 16, 2012; next release is March 16, 2012)
    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 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