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Manufacturing Biweekly Update

April 27, 2012 [past updates]


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


Biweekly Notes

The third industrial revolution: The digitization of manufacturing

The revolution will affect not only how things are made, but where. Factories used to move to low-wage countries to curb labor costs. But labor costs are growing less and less important: a $499 first-generation iPad included only about $33 of manufacturing labor, of which the final assembly in China accounted for just $8. Offshore production is increasingly moving back to rich countries not because Chinese wages are rising, but because companies now want to be closer to their customers so that they can respond more quickly to changes in demand. And some products are so sophisticated that it helps to have the people who design them and the people who make them in the same place. The Boston Consulting Group reckons that in areas such as transport, computers, fabricated metals and machinery, 10-30% of the goods that America now imports from China could be made at home by 2020, boosting American output by $20 billion-55 billion a year.
(The Economist |April 21, 2012)
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US Manufacturing could be big winner from Europe crisis

Among all the problems the European debt crisis pose to the global economy comes one possible benefit: A much-needed lift for American manufacturers. Earnings for large companies like 3M and United Technologies glistened in the first quarter, thanks in good part to bustling domestic business and some shield from the foreign turmoil. The growth in manufacturing, in turn, could help keep gross domestic product from plummeting to the recession levels being seen in Europe. U.S. companies are far less dependent on trade for GDP growth, so a downtrodden European consumer isn't as vital to American expansion. The U.S. government releases its initial GDP estimate for the first quarter Friday morning, with economists expecting a gain of about 2.6 percent. "The net effect is a growth cycle that is likely to favor U.S. sectors such as manufacturing," strategists at Bank of America Merrill Lynch said in a research note. "The US manufacturing sector may benefit from the wage constraint, cheap resources and inexpensive working capital that the post-credit crunch world provides."
(CNBC |April 26, 2012)
[Read More]

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U.S. Manufacturing Key Facts

Manufacturing Wage Rates

  • In March 2012, average hourly earnings in manufacturing were $19.06 (preliminary), up 0.16 percent from previous month, and up 0.85 percent from March 2011’s $18.90.

    (BLS/DOL Employment data from “The Employment Situation, USDL 12-0614,” released April 6, 2012; next release is May 4, 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

  • 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 May 31, 2012)
    http://www.bea.gov/newsreleases/national/gdp/2011/pdf/gdp3q11_3rd.pdf

       

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Manufacturing Employment

  • In March 2012, manufacturing employment went up, with an increase of 37,000 jobs.

  • In March, durable goods manufacturing gained 26,000 jobs with increases in transportation equipment (+13,000), machinery (+6,500), fabricated metal products (+4,900), computer and electronic products (+2,200), electrical equipment and appliances (+1,200), and primary metals (+800). However, job loss occurred in wood products (-900), nonmetallic mineral products (-600), and furniture and related products (-300). There was no change of employment in miscellaneous manufacturing.

  • In March, nondurable goods manufacturing gained 11,000 jobs with increases in food manufacturing (+4,000), paper and paper products (+3,400), plastics and rubber products (+3,400), chemicals (+2,900), beverages and tobacco products (+1,000), and apparel (+300). However, job losses occurred in printing and related support activities (-2,800), leather and allied products (-500), petroleum and coal products (-400), textile mills (-100), and textile product 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 12-0614,” released April 6, 2012; next release is May 4, 2012) http://www.bls.gov/news.release/pdf/empsit.pdf

       

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Manufacturing Production UPDATED

  • In March 2012, manufacturing production was down (-0.2 percent) from previous month and was up (+4.8 percent) above its year-earlier level.

  • Production of durable goods was down (-0.2 percent) from the previous month. The durable industries that registered increases in output included motor vehicles and parts (0.6 percent), machinery (0.5 percent), miscellaneous (0.4 percent), and wood products (0.3 percent). The durable industries that registered decreases in output included nonmetallic mineral products (-2.4 percent), primary metals (-1.8 percent), furniture and related products (-1.7 percent), electrical equip., appliances, and components (-1.2 percent), aerospace and miscellaneous transportation equipment (-0.9 percent), and fabricated metal products (-0.1 percent). There was no change in output for computer and electronic products.

  • Production of nondurable goods was down (-0.2 percent) from the previous month. The nondurable manufacturing industries that registered increases in output included chemicals (+0.3 percent), and textile and product mills (+0.2 percent). The nondurable industries that registered decreases in output included printing and support (-2.2 percent), apparel and leather (-1.6 percent), petroleum and coal products (-0.9 percent), paper (-0.5 percent), plastics and rubber products (-0.3 percent), and food, beverage and tobacco products (-0.2 percent).

  • Other manufacturing (non-NAICS) was up (0.1 percent).

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

       

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Manufacturing Capacity Utilization UPDATED

  • In March 2012, manufacturing industries (NAICS based) operated at 78.3 percent of capacity, (-0.3 percent) below the revised capacity utilization level from previous month, and down (-0.4 percentage) points below their 1972-2011 average of 78.7 percent.

  • In March 2012, durable manufacturing, capacity utilization operated at 77.5 percent capacity, down (-0.3 points) from previous month. Decreased capacity utilization was registered in primary metals (-1.3 points), nonmetallic mineral products (-1.3 points), furniture and related products (-1.1 points), electrical equip., appliances, and components (-0.9 points), aerospace and miscellaneous transportation equipment (-0.8 points), computer and electronic products (-0.5 points), and fabricated metal products (-0.1 points). Increased capacity utilization was registered in wood products (+0.4 points), motor vehicles and parts (+0.4 points), machinery (+0.3 points), and miscellaneous (+0.1 points).

  • In March 2012, non-durable manufacturing, capacity utilization operated 79.3 percent capacity, down 0.2 percent from the previous month. Decreased capacity utilization was registered in printing and support (-1.3 points), apparel and leather (-1.0 points), petroleum and coal products (-0.8 points), plastics and rubber products (-0.3 points), paper (-0.3 points), and food, beverage, and tobacco products (-0.2 points). Increased capacity utilization was registered in textile and product mills (+0.2 points), and chemicals (+0.2 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 April 17, 2012; next release is May 16, 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 February 2012 were 5.09 percent higher than the previous month. Imports were 4.48 percent lower.

  • In 2012, U.S. manufactured goods exports accounted for 86.2 percent of all U.S. exports of goods, compared with 83.9 percent a year ago.

  • The 2012 trade deficit in manufactured goods of $68.6 billion was $1.3 billion more when compared with $67.3 billion a year ago.

    (USA Trade Online, U.S. Census Bureau, released April 12, 2012; Next release is May 10, 2012)
    http://www.usatradeonline.gov/

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Manufactured Goods Shipments

  • Shipments of manufactured durable goods in February, down following two consecutive monthly increases, decreased $0.7 billion or 0.4 percent to $206.7 billion, unchanged from the previously published decrease. This followed a 0.1 percent January increase.

  • In February, shipments increased in machinery (2.3 percent), computers and electronic products (+1.0 percent), primary metals (+0.6 percent), and miscellaneous durable goods (+0.2 percent). However, shipments decreased in wood products (-5.0 percent), transportation equipment (-2.5 percent), furniture and related products (-1.9 percent), electrical equipment, appliances, and components (-1.2 percent), fabricated metal products (-0.4 percent), and nonmetallic mineral products (-0.2 percent).

    (Census Bureau/DOC data from “Report on Manufacturers’ Shipments, Inventories and Orders (M3-2(12)-2, CB12-52),” April 3, 2012; next release is May 2, 2012)
    http://www.census.gov/manufacturing/m3/

       

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Manufactured Goods Prices

  • In March 2012, the Producer Price Index (PPI) for finished goods, except foods and energy, increased by 0.3 percent compared to previous month.

  • The index for finished energy goods was down (-1.0 percent) from previous month.

  • A seasonally adjusted decrease in price from February to March was registered in no. 2 diesel fuel (-6.3 percent), gasoline price (-2.0 percent), home heating oil and distillates (-1.2 percent), and residential electric power (-0.3 percent). An increase in price was registered in liquefied petroleum gas (+6.8 percent), and residential gas (+0.7 percent).

    (BLS/DOL data from “Producer Price Indexes, USDL 12-0665,” released April 12, 2012; next release is May 11, 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 March for the 32nd consecutive month, and the overall economy grew for the 34th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®.

  • Manufacturing continued its growth in March as the PMI registered 53.4 percent, an increase of 1 percentage point when compared to February's reading of 52.4 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 March were Production, +3.0 points increase to 58.3; Employment, +2.9 points increase to 56.1; Inventories, +0.5 points increase to 50.0; New Orders -0.4 points decrease to 54.5; Supplier Deliveries, -1.0 points decrease to 48.0.

    U.S. Industries Reporting Growth in March 2012

    • Apparel, Leather & Allied Products
    • Nonmetallic Mineral Products
    • Primary Metals
    • Petroleum & Coal Products
    • Paper Products
    • Machinery
    • Miscellaneous Manufacturing
    • Wood Products
    • Furniture & Related Products
    • Transportation Equipment
    • Plastics & Rubber Products
    • Food, Beverage & Tobacco Products
    • Printing & Related Support Activities
    • Fabricated Metal Products
    • Electrical Equipment, Appliances & Components

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