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Manufacturing Biweekly Update

July 8, 2011 [past updates]


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


Biweekly Notes

US Manufacturing Rebounded Unexpectedly During June

The pace of growth in the U.S. manufacturing sector picked up for the first time in four months in June, a sign of optimism for the sputtering economy, according to an industry report released Friday. The Institute for Supply Management said its index of national factory activity rose to 55.3 from 53.5 the month before. The reading topped expectations for 51.8, according to a Reuters poll of economists. A reading above 50 indicates expansion in the manufacturing sector, while a number below 50 means contraction. The report alleviated some fears over the strength of the recovery but analysts said it was not yet a clear sign that the recent weakness in growth was past. "It's too soon to say whether the soft patch is over. We had such a big drop last month. We are just seeing some of the retracement. This takes some of the sting out of last month's drop," said Robert Brusca, chief economist at Fact and Opinion Economics in New York.
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(Reuters |CNBC |July 1, 2011)

Surging China costs turn some U.S. makers homeward

On a recent morning at Master Lock's 90-year-old factory in Milwaukee, a cluster of machinery was whirring, every 2 seconds spitting out one of the combination locks used by American high schoolers as the company readied for the back-to-school rush. The seven-day-a-week, three-shift-per-day whirlwind of activity marked a change from two years ago, when the machine normally ran for just a few hours a day because the unit of Fortune Brands Inc (FO.N) was ordering more padlocks from suppliers in China instead of making them. Why move production from the world's low-cost workshop back to a unionized U.S. factory where wages are six times higher than in China? Efficiency: The machine in Milwaukee is about 30 times as fast as the Chinese factories the company had been buying from, more than making up for the difference in wages. Master Lock is not alone. General Electric Co (GE.N) and Boeing Co (BA.N) are also part of the small group of U.S. companies that are boosting production at their U.S. factories. A variety of factors are driving the shift, including rising wages in parts of Asia, surging fuel prices and the complexity of transporting goods across the Pacific.
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(Reuters| July 1, 2011)

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U.S. Manufacturing Key Facts

Manufacturing Wage Rates updated

  • In June 2011, average hourly earnings in manufacturing were $18.91 (preliminary), down 0.05 percent from previous month, and up 1.72 percent from June 2010’s $18.59.

    (BLS/DOL Employment data from “The Employment Situation, USDL 11-1011,” released July 8 2011; next release is August 5, 2011)
    http://www.bls.gov/news.release/pdf/empsit.pdf

       

Manufacturing Wage Rates (Quarterly, Yearly)

  • In the first-quarter of 2011, hourly compensation from previous quarter, annual rate (revised) was up 2.8 percent in total manufacturing, up 2.9 percent in durable manufacturing and up 2.1 percent in nondurable manufacturing.

  • In the first-quarter of 2011, hourly compensation of all manufacturing workers increased 3.4 percent (revised), compared to a 2.8 percent increase during the first-quarter of 2010. Real hourly compensation in the total manufacturing sector increased 1.1 percent in the first-quarter of 2011, compared to 0.4 percent increase in the first-quarter of 2010.

    (BLS/DOL Productivity data from “Productivity and Costs, First Quarter 2011, Revised,” USDL 11-0808, released June 2, 2011; next release is August 9, 2011)
    http://www.bls.gov/news.release/pdf/prod2.pdf

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Manufacturing Profits

  • In the firsts quarter of 2011, manufacturing profits increased 16.2 percent, or $39.1 billion, to $280.6 billion from $241.5 billion in the fourth quarter. Compared with first quarter profits of 2010, manufacturing profits were up $30.2 billion in the first quarter of 2011.

  • First quarter 2011 profits for all non-financial industries (manufacturing being a subcategory) increased $142.1 billion (revised) from the fourth quarter of 2010 to $1027.5 billion.

    (BEA/DOC GDP data from “Gross Domestic Product and Corporate Profits, BEA 11-32,” released June 24, 2011; next release is July 29, 2011)
    http://www.bea.gov/newsreleases/national/gdp/2011/pdf/gdp1q11_3rd.pdf

       

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Manufacturing Employment updated

  • In June 2011, manufacturing employment went up, with an increase of 6,000 jobs.

  • In June, durable goods manufacturing gained 15,000 jobs with increase in fabricated metal products (7,800), machinery (4,100), transportation equipment (2,300), miscellaneous manufacturing (2,500), computer and electronic products (2,000), primary metals (1,300), and electrical equipment and appliances (700). However, job losses occurred in wood products (-5,100), nonmetallic mineral products (-800), furniture and related products (-200).

  • In June, the employment level in nondurable goods manufacturing sector lost 9,000 jobs with decreases in food manufacturing (-7,900), plastics and rubber products (-2,500), printing and related support activities (-2,300), apparel (-600), petroleum and coal products (-400), textile product mills (-300), and leather and allied products (-100). Meanwhile, job gains occurred in beverages and tobacco products (2,000), paper and paper products (1,100), textile mills (800), and chemicals (600).

  • The manufacturing employment of 11.7 million workers represents 8.9 percent of total non-farm employment.

    (BLS/DOL Employment data from “The Employment Situation, USDL-11-1011,” released July 8, 2011; next release is August 5, 2011) http://www.bls.gov/news.release/pdf/empsit.pdf

       

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Manufacturing Production

  • In May 2011, manufacturing production was up 0.4 percent from previous month and was 3.7 percent above its year-earlier level.

  • Production of durable goods was up 0.6 percent from the previous month. The durable industries that registered increases in output included furniture and related products (2.6 percent), nonmetallic mineral products (1.8 percent), machinery (1.7 percent), computer and electronic products (1.4 percent), aerospace and miscellaneous transportation equipment (1.0 percent), fabricated metal products (0.6 percent), and miscellaneous (0.5 percent). The durable industries that registered decreases in output included wood products (-1.8 percent), motor vehicles and parts (-1.5 percent), electrical equip., appliances, and components (-0.6 percent), and primary metal (-0.6 percent).

  • Production of nondurable goods was up 0.3 percent from the previous month. The nondurable manufacturing industries that registered increases in output included petroleum and coal products (2.0 percent), textile and product mills (1.4 percent), apparel and leather (0.8 percent), plastics and rubber products (0.6 percent), chemicals (0.4 percent), and paper (0.4 percent). The nondurable industries that registered decreases in output included printing and support (-0.5 percent), and food, beverage, and tobacco products (-0.4 percent).

  • Other manufacturing industries (non-NAICS) was up 0.7 percent.

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

       

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Manufacturing Capacity Utilization

  • In May 2011, manufacturing industries (NAICS based) operated at 74.9 percent of capacity, 3.9 percentage points below their 1972-2010 average of 78.8 percent and 0.2 percent points higher than their revised capacity utilization level in April 2011.

  • In May 2011, durable manufacturing, capacity utilization operated at 72.8 percent capacity, up 0.3 points from previous month. Increased capacity utilization was registered in furniture and related products (1.9 points), machinery (1.3 points), nonmetallic mineral products (1.1 points), aerospace and miscellaneous transportation equipment (0.6 points), fabricated metal products (0.6 points), computer and electronic products (0.4 points), and miscellaneous (0.2 points). Decreased capacity utilization was registered in wood products (-1.0 points), motor vehicles and parts (-1.0 points), primary metals (-0.5 points), and electrical equip., appliances, and components (-0.4 points).

  • In May 2011, non-durable manufacturing, capacity utilization operated at 77.3 percent capacity up 0.2 points from previous month. Increased capacity utilization was registered in petroleum and coal products (1.6 points), textile and product mills (1.0 points), plastics and rubber products (0.7 points), apparel and leather (0.6 points), paper (0.4 points), and chemicals (0.3 points), Decreased capacity utilization was registered in food, beverage, and tobacco products (-0.5 points). and printing and support (-0.2 points).

  • The index for other manufacturing industries (non-NAICS) increased 0.5 points.

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

       

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Manufacturing Productivity

  • Manufacturing sector productivity (revised) rose 4.2 percent in the first-quarter of 2011, as output increased 7.7 percent and hours increased 3.3 percent. Productivity was up 7.5 percent in the durable goods industries and up 2.6 percent in the nondurable goods industries. Unit labor costs in manufacturing decreased 1.4 percent in the first-quarter of 2011 and fell 0.7 percent over the last four quarters.

  • In durable goods industries, productivity (revised) was up 7.5 percent from previous quarter, as output increased 14.0 percent, and hours worked increased 6.1 percent.

  • In nondurable goods industries, productivity (revised) was up 2.6 percent from previous quarter, as output increased 1.5 percent, while hours worked decreased 1.1 percent.

    (BLS/DOL Productivity data from “Productivity and Costs, First-Quarter 2011, Revised,” USDL 11-0808, released June 2, 2011; next release is August 9, 2011)
    http://www.bls.gov/news.release/pdf/prod2.pdf

       

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Manufacturing Trade

  • Manufactured goods exports in April were 5.4 percent lower than the previous month. Imports were down 4.0 percent.

  • Year to date April 2011, U.S. manufactured goods exports accounted for 84.5 percent of all U.S. exports of goods, compared with 86.3 percent a year ago.

  • The year to date April 2011 trade deficit in manufactured goods of $133.2 billion was $28.3 billion more when compared with $104.9 billion a year ago.

    (Please note that the manufacturing trade numbers are now defined on a NAICS basis, so they will not be comparable with the prior figures.)

    (USA Trade Online, U.S. Census Bureau, June 9 data release. Next release is July 12, 2011)
    http://www.usatradeonline.gov/

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Manufactured Goods Shipments updated

  • Shipments of manufactured durable goods in May, up five of the last six months, increased $0.9 billion or 0.4 percent to $195.0 billion, revised from the previously published 0.3 percent increase. This followed a 1.4 percent April decrease.

  • In May, shipments increased in machinery (2.3 percent), electrical equipment, appliances, and components (1.9 percent), primary metals (1.7 percent), nonmetallic mineral products (0.9 percent), fabricated metal products (0.4 percent), and miscellaneous durable goods (0.1 percent). However, shipments decreased in wood products (-1.4 percent), computers and electronic products (-0.6 percent), transportation equipment (-0.5 percent). Furniture and related products showed no change in shipments.

    (Census Bureau/DOC data from “Full Report on Manufacturers’ Shipments, Inventories and Orders (M3-2(11)-05, CB11-120),” July 5, 2011; next release is August 3, 2011)
    http://www.census.gov/manufacturing/m3/

       

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Manufactured Goods Prices

  • In May 2011, 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 up 1.5 percent from previous month.

  • A seasonally adjusted increase of price from April to May was registered in liquefied petroleum gas (4.2 percent), gasoline price (2.7 percent), and residential electric power (0.9 percent), and residential gas (0.4 percent). Decrease of price from April to May was registered in no. 2 diesel fuel (-3.8 percent), and home heating oil and distillates (-3.5 percent).

    (BLS/DOL data from “Producer Price Indexes, USDL 11-0889,” released June 14, 2011; next release is July 14, 2011)
    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 June for the 23rd consecutive month, and the overall economy grew for the 25th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®.

  • Manufacturing continued its growth in June as the PMI registered 55.3 percent, an increase of 1.8 percentage points when compared to May's reading of 53.5 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 June were: Inventories, 5.4 points increase to 54.1; Employment, 1.7 points increase to 59.9; New Orders, 0.6 points increase to 51.6; Supplier Deliveries, 0.6 points increase to 56.3; and Production, 0.5 points increase to 54.5.

    U.S. Industries Reporting Growth in June 2011

    • Miscellaneous Manufacturing
    • Printing & Related Support Activities
    • Computer & Electronic Products
    • Paper Products
    • Textile Mills
    • Petroleum & Coal Products
    • Nonmetallic Mineral Products
    • Transportation Equipment
    • Chemical Products
    • Fabricated Metal Products
    • Machinery
    • Electrical Equipment, Appliances & Components

    (Institute for Supply Management, data released July 1, 2011; next release is August 1, 2011)
    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