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Manufacturing Biweekly Update

November 15, 2011 [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 down up


Biweekly Notes

US Manufacturing Comes Close to Stagnating as Global Demand Weakens

Manufacturing in the U.S. was close to stagnating in October as cooling global demand prompted factories to pare production and reduce inventories. The Institute for Supply Management’s factory index dropped to 50.8 last month from 51.6 in September, the Tempe, Arizona- based group’s data showed today. A reading of 52 was the median forecast in a Bloomberg News survey of economists. Fifty is the dividing line between growth and contraction. Manufacturing weakened from China to the U.K., partly a reflection of Beijing’s efforts to cool its economy and Europe’s debt crisis. Signs the industry that spearheaded the U.S. recovery is stumbling highlight the risks to growth as Federal Reserve policy makers meet to determine if more monetary easing is needed to spur demand.
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(Bloomberg News |November 1, 2011)

Some manufacturing heads back to USA

Faced with rising costs, General Electric is moving production of its new energy-efficient water heater halfway around the world. The country it's leaving? China. The one it's bringing 400 jobs and a newly renovated factory? The United States. A small but growing band of U.S. manufacturers — including giants such as General Electric, NCR and Caterpillar — are turning the seemingly inexorable offshoring movement on its head, bringing some production to the U.S. from far-flung locations such as China. Others that were buying components overseas are switching to U.S. suppliers. Ford Motor said Wednesday that it's bringing nearly 2,000 jobs to its U.S. plants by 2012 from suppliers, including those in Japan, Mexico and India. Experts say the initiatives could moderate job losses that have dramatically shrunk the U.S. manufacturing industry. There are myriad reasons for the shifts, often called "onshoring" or "reshoring." Chinese wages and shipping costs have risen sharply in the past few years while U.S. salaries have stayed flat, or in some cases, fallen in the recession. Meanwhile, U.S. manufacturers have been frustrated by the sometimes poor quality of goods made by foreign contractors, theft of their intellectual property and long product-delivery cycles that make them less responsive to customer demand.
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(USA TODAY |November 6, 2011)

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U.S. Manufacturing Key Facts

Manufacturing Wage Rates UPDATED

  • In October 2011, average hourly earnings in manufacturing were $19.01 (preliminary), up 0.5 percent from previous month, and up 1.6 percent from October 2010’s $18.71.

    (BLS/DOL Employment data from “The Employment Situation, USDL 11-1576,” released November 4, 2011; next release is December 2, 2011)
    http://www.bls.gov/news.release/pdf/empsit.pdf

       

Manufacturing Wage Rates (Quarterly, Yearly) UPDATED

  • In the third-quarter of 2011, hourly compensation from previous quarter, annual rate (preliminary) was up 0.6 percent in total manufacturing, up 1.7 percent in durable manufacturing and down -1.4 percent in nondurable manufacturing.

  • In the third-quarter of 2011, hourly compensation of all manufacturing workers increased 2.5 percent, compared to a 1.4 percent increase during the third-quarter of 2010. Real hourly compensation in the total manufacturing sector decreased -1.2 percent in the third-quarter of 2011, compared to 0.2 percent increase in the third-quarter of 2010.

    (BLS/DOL Productivity data from “Productivity and Costs, Third Quarter 2011, Preliminary” USDL 11-1575, released November 3, 2011; next release is November 30, 2011)
    http://www.bls.gov/news.release/pdf/prod2.pdf

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Manufacturing Profits

  • • In the second quarter of 2011, manufacturing profits increased 14.8 percent, or $32.3 billion, to $249.9 billion from $217.6 billion in the first quarter. Compared with second quarter profits of 2010, manufacturing profits were up $12.6 billion in the second quarter of 2011.

  • • Second quarter 2011 profits for all non-financial industries (manufacturing being a subcategory) increased $87.1 billion from the first quarter of 2011 to $945.9 billion.

    (BEA/DOC GDP data from “Gross Domestic Product, BEA 11-49,” released September 29, 2011; next release is October 27, 2011)
    http://www.bea.gov/newsreleases/national/gdp/2011/pdf/gdp2q11_3rd.pdf

       

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Manufacturing Employment UPDATED

  • In October 2011, manufacturing employment went up, with an increase of 5,000 jobs.

  • In October, durable goods manufacturing gained 11,000 jobs with increases in transportation equipment (9,500), machinery (3,900), primary metals (2,300), fabricated metal products (600), electrical equipment and appliances (500), and wood products (200). However, job loss occurred in miscellaneous manufacturing (-2,400), furniture and related products (-1,100), computer and electronic products (-1,100), and nonmetallic mineral products (-800).

  • In October, employment in nondurable goods manufacturing sector lost 6,000 jobs with decreases in chemicals (-2,800), printing and related support activities (-1,900), plastics and rubber products (-1,600), textile mills (-1,100), beverages and tobacco products (-900), and textile product mills (-600). Meanwhile, job gain occurred in petroleum and coal products (1,300), food manufacturing (700), apparel (500), paper and paper products (400), and leather and allied products (200).

  • The manufacturing employment of 11.8 million workers represents 8.9 percent of total non-farm employment.

    (BLS/DOL Employment data from “The Employment Situation, USDL-11-1576,” released November 4, 2011; next release is December 2, 2011) http://www.bls.gov/news.release/pdf/empsit.pdf

       

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Manufacturing Production

  • In September 2011, manufacturing production was up 0.4 percent from previous month and was 3.9 percent above its year-earlier level.

  • Production of durable goods was up 0.6 percent from previous month. The durable industries that registered increases in output included wood products (2.4 percent), aerospace and miscellaneous transportation equipment (2.3 percent), miscellaneous (1.4 percent), electrical equip., appliances, and components (1.3 percent), computer and electronic products (1.0 percent), motor vehicles and parts (0.7 percent), and machinery (0.2 percent). The durable industries that registered decreases in output included furniture and related products (-2.2 percent), nonmetallic mineral products (-0.9 percent), primary metal (-0.4 percent), and fabricated metal products (-0.3 percent).

  • Production of nondurable goods was up 0.2 percent from the previous month. The nondurable manufacturing industries that registered increases in output included paper (1.1 percent), food, beverage, and tobacco products (0.2 percent), chemicals (0.2 percent), and plastics and rubber products (0.1 percent). The nondurable industries that registered decreases in output included apparel and leather (-1.2 percent), printing and support (-0.5 percent), textile and product mills (-0.1 percent), and petroleum and coal products (-0.1 percent).

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

    (Federal Reserve Statistical data from “Industrial Production and Capacity Utilization, G17 (419),” released October 17, 2011; next release is November 16, 2011)
    http://www.federalreserve.gov/releases/g17/Current/g17.pdf

       

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Manufacturing Capacity Utilization

  • In September 2011, manufacturing industries (NAICS based) operated at 75.7 percent of capacity, 3.1 percentage points below their 1972-2010 average of 78.8 percent, and 0.2 percent above their revised capacity utilization level in August 2011.

  • In September 2011, durable manufacturing, capacity utilization operated at 74.3 percent capacity, up 0.3 points from previous month. Increased capacity utilization was registered in aerospace and miscellaneous transportation equipment (1.7 points), wood products (1.6 points), electrical equip., appliances, and components (1.1 points), miscellaneous (0.8 points), motor vehicles and parts (0.3 points), machinery (0.1 points), and computer and electronic products (0.1 points). Decreased capacity utilization was registered in furniture and related products (-1.5 points), nonmetallic mineral products (-0.3 points), primary metals (-0.2 points), and fabricated metal products (-0.2 points).

  • In September 2011, non-durable manufacturing, capacity utilization operated 77.3 percent capacity, up 0.1 from previous month. Increased capacity utilization was registered in paper (0.9 points), plastics and rubber products (0.2 points), textile and product mills (0.1 points), and chemicals (0.1 points). Decreased capacity utilization was registered in apparel and leather (-0.8 points), printing and support (-0.3 points), petroleum and coal products (-0.2 points). Meanwhile, capacity utilization was unchanged for food, beverage, and tobacco products.

  • The index for other manufacturing industries (non-NAICS) decreased 0.4 points.

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

       

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Manufacturing Productivity UPDATED

  • Manufacturing sector productivity was up 5.4 percent in the third-quarter of 2011, as output increased 4.7 percent and hours decreased -0.8 percent. Productivity was up 9.9 percent in the durable goods industries and up 0.7 percent in the nondurable goods industries. Unit labor costs in manufacturing decreased -4.6 percent in the third-quarter of 2011, and increased -0.5 percent over the last four quarters.

  • In durable goods industries, productivity was up 9.9 percent from previous quarter, as output increased 8.3 percent, while hours worked decreased -1.4 percent.

  • In nondurable goods industries, productivity was up 0.7 percent from previous quarter, as output increased 1.0 percent, and hours worked increased 0.4 percent.

    (BLS/DOL Productivity data from “Productivity and Costs, Third-Quarter 2011, Preliminary,” USDL 11-1575, released November 3, 2011; next release is November 30, 2011)
    http://www.bls.gov/news.release/pdf/prod2.pdf

       

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Manufacturing Trade UPDATED

  • Manufactured goods exports in September were 1.10 percent higher than the previous month. Imports were 2.69 percent lower.

  • Year to date September 2011, U.S. manufactured goods exports accounted for 85.5 percent of all U.S. exports of goods, compared with 86.8 percent a year ago.

  • The year to date September 2011 trade deficit in manufactured goods of $334.1 billion was $35.4 billion more when compared with $298.7 billion a year ago.

    (USA Trade Online, U.S. Census Bureau November 10 data release. Next release is December 9, 2011)
    http://www.usatradeonline.gov/

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Manufactured Goods Shipments UPDATED

  • Shipments of manufactured durable goods in September, down following four consecutive monthly increases, decreased $1.3 billion or 0.6 percent to $200.2 billion, revised from the previously published 0.7 percent decrease. This followed a 0.1 percent August increase.

  • In September, shipments increased fabricated metal products (1.2 percent), primary metals (1.1 percent), miscellaneous durable goods (1.0 percent), and nonmetallic mineral products (0.1 percent).However, shipments decreased in transportation equipment (-2.4 percent), machinery (-1.2 percent), computers and electronic products (-1.2 percent), furniture and related products (-0.9 percent), electrical equipment, appliances, and components (-0.4 percent), and wood products (-0.2 percent).

    (Census Bureau/DOC data from “Full Report on Manufacturers’ Shipments, Inventories and Orders (M3-2(11)-09, CB11-182),” November 3, 2011; next release is December 5, 2011)
    http://www.census.gov/manufacturing/m3/

       

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Manufactured Goods Prices

  • In September 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 2.3 percent from previous month.

  • A seasonally adjusted increase of price from August to September was registered in no. 2 diesel fuel (7.3 percent), liquefied petroleum gas (5.6 percent), gasoline price (4.2 percent), home heating oil and distillates (2.3 percent), and residential electric power (0.3 percent). A decrease in price from August to September was registered in residential gas (-0.7 percent).

    (BLS/DOL data from “Producer Price Indexes, USDL 11-1497,” released October 18, 2011; next release is November 15, 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 October for the 27th consecutive month, and the overall economy grew for the 29th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®.

  • Manufacturing continued its growth in October as the PMI registered 50.8 percent, a decrease of 0.8 percentage point when compared to September's reading of 51.6 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 October were New Orders +2.8 points increase to 52.4; Supplier Deliveries, -0.1 points decrease to 51.3; Employment, -0.3 points decrease to 53.5; Production, -1.1 points decrease to 50.1; and Inventories, -5.3 points decrease to 46.7;

    U.S. Industries Reporting Growth in September 2011

    • Computer & Electronic Products
    • Petroleum & Coal Products
    • Food, Beverage & Tobacco Products
    • Nonmetallic Mineral Products
    • Primary Metals
    • Fabricated Metal Products
    • Paper Products
    • Machinery

    (Institute for Supply Management, data released October 3, 2011; next release is November 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