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Manufacturing Biweekly Update

June 22, 2012 [past updates]


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


Biweekly Notes

US factory, jobs data highlight struggling recovery

U.S manufacturing grew at its slowest pace in 11 months in June and the number of Americans filing new applications for unemployment aid fell slightly last week, further evidence the economy was weakening. Other reports on Thursday underscored the difficulty the economy was having breaking out of a soft patch. Factory activity in the Mid-Atlantic region tumbled to a 10-month low in June and home resales slipped in May. The economy is going through a repeat of 2011 when growth stumbled in summer, with Europe's debt crisis and uncertainty over the course of U.S. fiscal policy making businesses reluctant to hire. Financial information firm Markit said its U.S. "flash" manufacturing gauge fell to 52.9 in June from 54.0 in May. June's reading was the lowest since last July although it stayed above 50, indicating an expansion in activity. For the second straight month, weaker demand from Europe and large emerging markets such as China dented sales. Markit said U.S. manufacturers reported the second largest decline in new export orders since September 2009.
(Reuters| June 21, 2012)
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Global manufacturers get the blues

From China to Germany to the United States, factories that had been bustling with activity are slowing their output -- and raising concerns about a global economic slump. On Thursday, early readings of purchasing managers in China and Europe showed new signs of slowdowns in manufacturing. The HSBC survey of Chinese manufacturers found export orders declined at the fastest rate since March 2009, as the overall index fell to a seven-month low. In Europe, the manufacturing index for June remained at a three-year low, as manufacturing output in Germany -- the most important European economy -- fell at the fastest rate in three years. It was the second straight month of decline. A 16.6% drop in the Philadelphia Federal Reserve's regional manufacturing index Thursday set off some early alarm bells about U.S. factories as well. "Certainly it's a flashing amber light, but it's not a red light," said Peter Newland, U.S. economist for Barclays Capital, about the Philadelphia Fed reading. While many economists agree that overall U.S. manufacturing should continue its nearly three-year run of growth, there are concerns as well. U.S. auto sales slowed to their lowest pace of the year in May and job growth has ground to a near-halt in recent months. "If I see a large drop in auto sales, I'll get more worried," said Brett Ryan, economist with Deutsche Bank's New York office. "But so far, sales are still above last year's levels." He said even the weak jobs numbers recently show continued growth as well. The manufacturing slowdown in China can also been seen across other major emerging economies, although the readings are not as current as those reported Thursday. Indexes in Indonesia, Hong Kong and Brazil showed manufacturing in decline in May, while Taiwan was just above the level indicating expansion. Only Indian and Russian manufacturers reported solid growth in manufacturing among the major emerging economies.
(CNN| June 21, 2012)
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U.S. Manufacturing Key Facts

Manufacturing Wage Rates

  • In May 2012, average hourly earnings in manufacturing were $19.09 (preliminary), down 0.16 percent from previous month, and up 0.90 percent from May 2011’s $18.92.

    (BLS/DOL Employment data from “The Employment Situation, USDL 12-1070,” released June 1, 2012; next release is July 6, 2012)
    http://www.bls.gov/news.release/pdf/empsit.pdf

       

Manufacturing Wage Rates (Quarterly, Yearly)

  • In the first-quarter of 2012, hourly compensation from previous quarter, annual rate (revised) was unchanged in total manufacturing, down (-0.6 percent) in durable manufacturing and up (+1.0 percent) in nondurable manufacturing.

  • In the first-quarter of 2012, hourly compensation (revised) of all manufacturing workers decreased (-0.7 percent), compared to a (+2.8 percent) increase during the first-quarter of 2011. Real hourly compensation in the total manufacturing sector decreased (-3.4 percent) in the first-quarter of 2012, compared to (+0.6 percent) increase in the first-quarter of 2011.

    (BLS/DOL Productivity data from “Productivity and Costs, First Quarter 2012,” USDL 12-1123, released June 6, 2012; next release is August 8, 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 third 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 Jun 28, 2012)
    http://www.bea.gov/newsreleases/national/gdp/2011/pdf/gdp3q11_3rd.pdf

       

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Manufacturing Employment

  • In May 2012, manufacturing employment went up, with an increase of 12,000 jobs.

  • In May, durable goods manufacturing gained 13,000 jobs with increases in fabricated metal products (+5,700), transportation equipment (+4,100), primary metals (+3,800), machinery (+2,500), computer and electronic products (+1,700), electrical equipment and appliances (+1,200), and miscellaneous manufacturing (+800). However, job loss occurred in nonmetallic mineral products (-3,000), furniture and related products (-2,100), and wood products (-1,400).

  • In May, nondurable goods manufacturing lost 1,000 jobs with decreases in chemicals (-1,200), paper and paper products (-800), plastics and rubber products (-800), textile mills (-700), apparel (-500), petroleum and coal products (-500), printing and related support activities (-400), leather and allied products (-400), and textile product mills (-100). However, job gains occurred in beverages and tobacco products (+2,700), and food manufacturing (+1,200).

  • 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 12-0816,” released May 4, 2012; next release is June 1, 2012) http://www.bls.gov/news.release/pdf/empsit.pdf

       

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Manufacturing Production UPDATED

  • In May 2012, manufacturing production was down (-0.4 percent) from previous month and was up (+5.2 percent) above its year-earlier level.

  • Production of durable goods was down (-0.5 percent) from the previous month. The durable industries that registered decreases in output included furniture and related products (-1.7 percent), primary metals (-1.6 percent), motor vehicles and parts (-1.5 percent), nonmetallic mineral products (-1.1 percent), machinery (-0.5 percent), aerospace and miscellaneous transportation equipment (-0.4 percent), and computer and electronic products (-0.1 percent). The durable industries that registered increases in output included wood products (+1.0 percent), miscellaneous (+0.5 percent), electrical equip., appliances, and components (+0.3 percent), and fabricated metal products (+0.1 percent).

  • In May 2012, production of nondurable goods was down (-0.2 percent) from the previous month. The nondurable manufacturing industries that registered decreases in output included textile and product mills (-0.7 percent), plastics and rubber products (-0.5 percent), chemicals (-0.4 percent), paper (-0.4 percent), and food, beverage and tobacco products (-0.3 percent). The nondurable industries that registered increases in output included apparel and leather (+1.0 percent), petroleum and coal products (+0.9 percent), and printing and support (+0.3 percent).

  • Other manufacturing (non-NAICS) was down (-1.3 percent).

    (Federal Reserve Statistical data from “Industrial Production and Capacity Utilization, G17 (419),” released June 15, 2012; next release is July 17, 2012)
    http://www.federalreserve.gov/releases/g17/Current/g17.pdf

       

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Manufacturing Capacity Utilization UPDATED

  • In May 2012, manufacturing industries (NAICS based) operated at 78.2 percent of capacity, 0.3 percent below the capacity utilization level from previous month, and down (-0.5 percentage) points below their 1972-2011 average of 78.7 percent.

  • In May 2012, durable manufacturing, capacity utilization operated at 78.0 percent capacity, down (-0.5 points) from previous month. Decreased capacity utilization was registered in motor vehicles and parts (-1.2 points), primary metals (-1.1 points), furniture and related products (-1.1 points), machinery (-0.7 points), computer and electronic products (-0.6 points), aerospace and miscellaneous transportation equipment (-0.5 points), and nonmetallic mineral products (-0.5 points). Increased capacity utilization was registered in wood products (+0.8 points), electrical equip., appliances, and components (+0.4 points), and miscellaneous (+0.2 points). There was no change of capacity utilization in fabricated metal products.

  • In May 2012, non-durable manufacturing, capacity utilization operated 78.4 percent capacity, down (-0.1 points) from the previous month. Decreased capacity utilization was registered in plastics and rubber products (-0.5 points), textile and product mills (-0.4 points), food, beverage, and tobacco products (-0.3 points), paper (-0.3 points), and chemicals (-0.3 points). Increased capacity utilization was registered in petroleum and coal products (+0.9 points), apparel and leather (+0.8 points), and printing and support (+0.3 points).

  • The index for other manufacturing industries (non-NAICS) was down (-0.8 points).

    (Federal Reserve Statistical data from “Industrial Production and Capacity Utilization, G17 (419),” released June 15, 2012; next release is July 17, 2012)
    http://www.federalreserve.gov/releases/g17/Current/g17.pdf

       

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Manufacturing Productivity

  • Manufacturing sector productivity was up (+5.2 percent) in the first-quarter of 2012, as output increased (+10.0 percent) and hours increased (+4.6 percent). Productivity was up (+9.9 percent) in the durable goods industries and up (+0.1 percent) in the nondurable goods industries. Unit labor costs in manufacturing decreased (-4.9 percent) in the first-quarter of 2012, and decreased (-2.9 percent) over the last four quarters.

  • In durable goods industries, productivity was up (+9.9 percent) from previous quarter, as output increased (15.4 percent), while hours worked increased (4.9 percent).

  • In nondurable goods industries, productivity was up (+0.1 percent) from previous quarter, as output increased (+4.3 percent), and hours worked increased (+4.1 percent).

    (BLS/DOL Productivity data from “Productivity and Costs, First-Quarter 2012,” USDL 12-1123, released June 6, 2012; next release is August 8, 2012)
    http://www.bls.gov/news.release/pdf/prod2.pdf

       

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Manufacturing Trade

  • Manufactured goods exports in April 2012 were 8.58 percent lower than the previous month. Imports were 4.90 percent lower.

  • Year-to-date April 2012, U.S. manufactured goods exports accounted for 86.7 percent of all U.S. exports of goods, compared with 85.0 percent a year ago.

  • The year-to-date April 2012 trade deficit in manufactured goods of $135.7 billion was $4.8 billion more when compared with $130.9 billion a year ago.

    (USA Trade Online, U.S. Census Bureau, released June 8, 2012; Next release is July 11, 2012)
    http://www.usatradeonline.gov/

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Manufactured Goods Shipments

  • Shipments of manufactured durable goods in April, up four of the last five months, increased $1.4 billion or 0.6 percent to $222.5 billion, revised from the previously published 0.7 percent increase. This followed a 0.9 percent March increase.

  • In April, shipments increased in transportation equipment (+3.1 percent), nonmetallic mineral products (+1.0 percent), computers and electronic products (+0.8 percent), wood products (+0.8 percent), primary metals (+0.4 percent), and fabricated metal products (+0.1 percent). However, shipments decreased in machinery (-2.6 percent), electrical equipment, appliances, and components (-0.7 percent), and miscellaneous durable goods (-0.7 percent). There was no change of shipment in furniture and related products.

    (Census Bureau/DOC data from “Report on Manufacturers’ Shipments, Inventories and Orders (M3-2(12)-4, CB12-98),” June 4, 2012; next release is July 3, 2012)
    http://www.census.gov/manufacturing/m3/

       

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Manufactured Goods Prices UPDATED

  • In May 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 down (-4.3 percent) from previous month.

  • A seasonally adjusted decrease in price from April to May was registered liquefied petroleum gas (-9.8 percent), gasoline (-8.9 percent), residential gas (-2.5 percent), and no. 2 diesel fuel (-1.4 percent). An increase in price was registered in home heating oil and distillates (+1.5 percent), and residential electric power (+0.1 percent).

    (BLS/DOL data from “Producer Price Indexes, USDL 12-1181,” released June 13, 2012; next release is July 13, 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 May for the 34th consecutive month, and the overall economy grew for the 36th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®.

  • Manufacturing continued its growth in May as the PMI registered 53.5 percent, a decrease of 1.3 percentage points when compared to April's reading of 54.8 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 May were Production, -5.4 points decrease to 55.6; Inventories, -2.5 points decrease to 46.0; Supplier Deliveries, -0.5 points decrease to 48.7; Employment, -0.4 points decrease to 56.9; New Orders +1.9 points increase to 60.1.

    U.S. Industries Reporting Growth in May 2012

    • Nonmetallic Mineral Products
    • Furniture & Related Products
    • Apparel, Leather & Allied Products
    • Miscellaneous Manufacturing
    • Primary Metals
    • Electrical Equipment, Appliances & Components
    • Fabricated Metal Products
    • Machinery
    • Textile Mills
    • Paper Products
    • Computer & Electronic Products
    • Printing & Related Support Activities
    • Chemical Products

    (Institute for Supply Management, data released June 1, 2012; next release is July 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