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Manufacturing Biweekly Update

July 23, 2010 [past updates]


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


Biweekly Notes

Manufacturing in Philadelphia Fed Area Cooled in July; Results corroborate the New York Fed survey

Manufacturing in the Philadelphia region cooled in July as orders fell for the first time in a year, signaling the expansion is slowing. The Federal Reserve Bank of Philadelphia’s general economic index fell to 5.1 this month, the lowest level since August 2009, from 8 in June. Readings above zero signal growth in the regional gauge, which covers eastern Pennsylvania, southern New Jersey and Delaware. The bank’s orders gauge turned negative for the first time in 12 months. Manufacturing may moderate as companies are less pressed to rebuild inventories and the recovery shows signs of slackening. The results corroborate the New York Fed survey released earlier today that showed factories in that region expanded at the slowest pace this year. The figures follow a report from the Fed Bank of New York that showed its general economic index fell to 5.1 in July, the lowest level this year, from 19.6 the prior month. Another report from the Fed showed industrial production rose 0.1 percent in June, boosted by utility output, while manufacturing declined 0.4 percent.

(Bloomberg |July 15, 2010)
www.businessweek.com

U.S. jobless claims fall, manufacturing stumbles
New U.S. claims for jobless benefits tumbled to a near two-year low last week, but a modest gain in industrial output and a third monthly drop in wholesale prices in June confirmed a slackening in the economy's recovery. Other data on Thursday also implied the slowdown in manufacturing extended into July, but analysts said there was no evidence the economy was sliding back into recession. Initial claims for state unemployment benefits dropped 29,000 to 429,000 last week, the lowest level in 23 months, as seasonal layoffs at factories eased, the Labor Department said. That was well below market expectations for a fall to 450,000. In a second report, the department said producer prices fell 0.5 percent last month as gasoline prices dropped and food costs recorded their largest decline since April 2002.

(Reuters| Yahoo News| July 15, 2010)
news.yahoo.com

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U.S. Manufacturing Key Facts

Manufacturing Wage Rates

  • In June 2010, average hourly earnings in manufacturing were $18.54 (preliminary), down 0.11 percent from May 2010’s $18.56 (preliminary), and up 2.04 percent from June 2009’s $18.17.

    (BLS/DOL Employment data from “The Employment Situation, USDL 10-0886,” released July 2, 2010; next release is August 6, 2010)
    http://www.bls.gov/news.release/pdf/empsit.pdf

Manufacturing Wage Rates (Quarterly, Yearly)

  • During the first quarter of 2010, hourly compensation from previous quarter, annual rate remained the same in total manufacturing, down 0.4 percent in durable manufacturing and up 0.3 percent in nondurable manufacturing.

  • When consumer prices were taken into account, real hourly compensation from previous quarter, annual rate (revised) of all manufacturing workers decreased 1.5 percent in the fourth quarter, and decreased 0.7 percent (revised) in the annual rate of 2009.

  • In the first quarter of 2010, hourly compensation of all manufacturing workers grew 1.8 percent (revised), compared to a 5.4 percent increase during the first quarter of 2009. Real hourly compensation in the total manufacturing sector decreased 0.6 percent (revised) in the first quarter of 2010, compared to 5.5 percent increase in the first quarter of 2009.

    (BLS/DOL Productivity data from “Productivity and Costs, First Quarter 2010, Revised,” USDL 10-0747, released June 3, 2010; next release is August 10, 2010)
    http://www.bls.gov/news.release/pdf/prod2.pdf

       

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Manufacturing Profits

  • In the first quarter of 2010, manufacturing profits increased 29.4 percent, or $47.2 billion, to $207.7 billion from $160.5 billion in the third quarter. Compared with first quarter profits of 2009, manufacturing profits were up $86.1 billion in the first quarter of 2010.

  • First quarter 2010 profits for all non-financial industries (manufacturing being a subcategory) increased 20.6 percent from the fourth quarter of 2009 to $1027.1 billion.

    (BEA/DOC GDP data from “Gross Domestic Product and Corporate Profits, BEA 10-31,”released June 25, 2010; next release is July 30, 2010)
    http://www.bea.gov/newsreleases/national/gdp/2010/pdf/gdp1q10_3rd.pdf

       

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Manufacturing Employment

  • In June, 2010, manufacturing employment went up, with an increase of 9,000.

  • In June, durable goods manufacturing gained 13,000 jobs, with increases in fabricated metal products (6,600), machinery (3,500), primary metals (2,500), wood products (1,500), computer and electronic products (1,100), and furniture and related products (700). Job losses occurred in nonmetallic mineral products (-1,500), miscellaneous manufacturing (-900), transportation equipment (-400), and electrical equipment and appliances (-200).

  • Nondurable goods manufacturing lost 4,000 jobs with decreases in food manufacturing (-2,200), printing and related support activities (-2,100), chemicals (-1,700), beverages and tobacco products (-1,300), paper and paper products (-200), and petroleum and coal products (-100). However, job gains occurred in plastics and rubber products (2,700), leather and allied products (400), and apparel (100). There was no change in textile product mills and textile mills.

  • 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 10-0886,” released July 2, 2010; next release is August 6 2, 2010) http://www.bls.gov/news.release/pdf/empsit.pdf

       

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Manufacturing Production updated

  • In June 2010, manufacturing production was down 0.4 percent from previous month and was 8.3 percent above its year-earlier level.

  • Production of durable goods was up 0.1 percent from previous month. The durable manufacturing industry that registered increases in output included primary metal (2.2 percent), machinery (1.4 percent), nonmetallic mineral products (0.9 percent), fabricated metal products (0.6 percent), aerospace and miscellaneous transportation equipment (0.5 percent), and computer and electronic products (0.3 percent). The durable industry that registered decreases in output included wood products (-2.9 percent), motor vehicles and parts (-1.9 percent), miscellaneous (-1.9 percent), electrical equip., appliances, and components (-0.5 percent), and furniture and related products (-0.5 percent).

  • The production of nondurable goods was down 0.7 percent from previous month. The nondurable manufacturing industries that registered increases in output included apparel and leather (1.4 percent), petroleum and coal products (1.4 percent), and plastics and rubber products (0.5 percent). The nondurable industry that registered decreases in output included food, beverage, and tobacco products (-1.7 percent), paper (-0.8 percent), textile and product mills (-0.7 percent), printing and support (-0.7 percent), and chemical (-0.6 percent).

  • The index for other manufacturing industries (non-NAICS) was down 2.1 percent from previous month.

    (Federal Reserve Statistical data from “Industrial Production and Capacity Utilization, G17 (419),” released July 15, 2010; next release is August 17, 2010)
    http://www.federalreserve.gov/releases/g17/Current/g17.pdf

       

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Manufacturing Capacity Utilization updated

  • In June 2010, manufacturing industries (NAICS based) operated at 71.6 percent of capacity, 7.4 percentage points below their 1972-2009 average of 79.0 percent and 0.2 percent points lower than their revised capacity utilization level in May 2010.

  • In durable manufacturing, capacity utilization remain the same at 69.6 percent. Increased capacity utilization was registered in primary metal (1.4 points), machinery (1.1 points), nonmetallic mineral products (0.6 points), fabricated metal products (0.5 points), and aerospace and miscellaneous transportation equipment (0.2 points). Decreased capacity utilization was registered in miscellaneous (-1.5 points), wood products (-1.4 points), motor vehicles and parts (-1.1 points), electrical equip., appliances, and components (-0.3 points), computer and electronic products (-0.2 points), and furniture and related products (-0.1 points).

  • In non-durable manufacturing, capacity utilization decreased 0.5 percentage points in June from May (revised) to 74.1 percent. Increased capacity utilization was registered in apparel and leather (1.5 points), petroleum and coal products (1.3 points), and plastics and rubber products (0.3 points). Decreased capacity utilization was registered in food, beverage, and tobacco products (-1.3 points), paper (-0.4 points), chemical (-0.4 points), printing and support (-0.3 points), and textile and product mills (-0.2 points).

  • The index for other manufacturing industries (non-NAICS) decreased 1.5 points from last month.

    (Federal Reserve Statistical data from “Industrial Production and Capacity Utilization, G17 (419),” released July 15, 2010; next release is August 17, 2010)
    http://www.federalreserve.gov/releases/g17/Current/g17.pdf

       

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Manufacturing Productivity

  • Manufacturing sector productivity (revised) rose 1.5 percent in the first quarter of 2010, as output increased 7.2 percent and hours increased 5.6 percent. Productivity grew 3.0 percent in the durable goods industries and 0.9 percent in the nondurable goods industries. Unit labor costs in manufacturing declined 1.5 percent in the first quarter of 2010 and fell 5.1 percent over the last four quarters

  • In durable goods industries, productivity (revised) grew 3.0 percent from previous quarter, annual rate in the first quarter of 2010, as output increased 10.2 percent, while hours worked also increased 7.0 percent.

  • In nondurable goods industries, productivity (revised) grew 0.9 percent from previous quarter, annual rate in the first quarter of 2010, as output increased 4.4 percent, while hours worked also increased 3.4 percent.

    (BLS/DOL Productivity data from “Productivity and Costs, First Quarter 2010 Revised,” USDL 10-0747, released June 3, 2010; next release is August 10, 2010)
    http://www.bls.gov/news.release/pdf/prod2.pdf

       

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Manufacturing Trade updated

  • Year to date May 2010, U.S. manufactured goods exports accounted for 80.5 percent of all U.S. exports of goods, compared with 82.1 percent a year ago.

  • Manufactured goods exports in May were 3.8 percent higher than the previous month. Imports were up 4.1 percent.

  • The year to date May 2010 trade deficit in manufactured goods of $135.9 billion was $20.3 billion more when compared with $115.6 billion a year ago.

    (Census/BEA/DOC Foreign Trade Statistics data from “U.S. International Trade in Goods and Services, CB10-101, BEA10-36, FT-900(10-05),” released July 13, 2010; next release is August 11, 2010)
    http://www.census.gov/foreign-trade/Press-Release/current_press_release/ft900.pdf

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Manufactured Goods Shipments

  • Shipments of manufactured durable goods in May, down following two consecutive monthly increases, decreased $0.8 billion or 0.4 percent to $196.0 billion. This followed a 1.8 percent April increase. Transportation equipment, down following two consecutive monthly increases, had the largest decrease, $1.3 billion or 2.8 percent to $47.1 billion.

  • In May, shipments increased in machinery (3.2 percent), fabricated metal products (1.2 percent), and primary metals (1.0 percent), and electrical equipment, appliances, and components (0.3 percent). Shipment decreased in transportation equipment (-2.8 percent), and computer and electronic products (-2.6 percent).

    (Census Bureau/DOC data from “Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders (M3-1(10)-05, CB10-94),”June 24, 2010; next release is July 28, 2010)
    http://www.census.gov/manufacturing/m3/

       

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Manufactured Goods Prices updated

  • In June 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 down 0.5 percent from previous month.

  • A seasonally adjusted decrease of price from May to June was registered in home heating oil and distillates (-8.1 percent), No. 2 diesel fuel (-7.4 percent), liquefied petroleum gas (-3.5 percent), and gasoline price (-1.6 percent). A seasonally adjusted increase of price was registered in residential gas (2.1 percent), and residential electric power (0.7 percent).

    (BLS/DOL data from “Producer Price Indexes, USDL 10-0965,” released July 15, 2010; next release is August 17, 2010)
    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 June for the 11th consecutive month, and the overall economy grew for the 14th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®.

  • Manufacturing continued to grow in June as the PMI registered 56.2 percent, a decrease of 3.5 percentage points when compared to May's reading of 59.7 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: Employment down 2.0 points to 57.8, Inventories up 0.2 points to 45.8, Production decreased 5.2 points to 61.4, and Supplier Deliveries down 3.7 points to 57.3. New Orders decreased 7.2 points to 58.5.

    U.S. Industries Reporting Growth in June 2010

    • Plastics & Rubber Products
    • Transportation Equipment
    • Printing & Related Support Activities
    • Computer & Electronic Products
    • Electrical Equipment, Appliances & Components
    • Paper Products
    • Fabricated Metal Products
    • Food, Beverage & Tobacco Products
    • Furniture & Related Products
    • Petroleum & Coal Products
    • Nonmetallic Mineral Products
    • Miscellaneous Manufacturing
    • Chemical Products

    (Institute for Supply Management data released July 1, 2010; next release is August 2, 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