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Manufacturing Biweekly Update

December 10, 2010 [past updates]


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


Biweekly Notes

U.S. economic climate warming up due in part to strong performance in the manufacturing industry

The United States economy continued to improve in the fall, posting steady growth in most regions despite signs of deceleration in the summer. Both consumer spending and manufacturing are on an upswing, boosting the prospects of a stronger long-term recovery. According to the Federal Reserve's latest regional business survey, the Beige Book, economic conditions as a whole improved modestly in October and November, with eight of the 12 reporting districts posting a pickup in business activity, while the remaining four — Philadelphia, Cleveland, Richmond and Atlanta — experienced unchanged or mixed conditions. Overall, nationwide economic performance was better than in the previous reporting period, largely due to gains in consumer spending on general merchandise and vehicles, as well as steady growth in the manufacturing sector.

(Thomasnet| December 9, 2010)
news.thomasnet.com

U.S. trade gap drops as exports rise to two-year high

The trade deficit in the U.S. shrank more than forecast in October as a weaker dollar and growing economies overseas propelled exports to a two-year high. The gap narrowed 13 percent to $38.7 billion, less than the lowest estimate of 78 economists surveyed by Bloomberg News and the smallest since January, Commerce Department figures showed today in Washington. Exports were the strongest since August 2008 as Mexico and China bought record amounts of U.S. products. General Dynamics, based in Falls Church, Virginia, is seeing “strong international order activity and interest, particularly in the emerging markets,” Chief Executive Officer Jay Johnson said in a Dec. 2 industry conference presentation. St. Paul, Minnesota-based 3M, the maker of Scotch tape and films to brighten television screens, is expanding in emerging markets, which make up one-third of its sales and may climb to as much as 45 percent by 2015, according to company estimates. “These opportunities continue to grow,” George W. Buckley, chief executive officer, said in a Dec. 7 conference call. Overseas sales will benefit from “India and Latin America, gathering momentum in sort of China-like style.” President Barack Obama is seeking to double American exports over the next five years. The Commerce Department has asked industry groups to review its proposal to relax export controls for technology items with military uses, covering sales to 37 allies including Germany, Japan and Canada.

(Bloomberg |December 10, 2010)
www.bloomberg.com

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U.S. Manufacturing Key Facts

Manufacturing Wage Rates updated

  • In November 2010, average hourly earnings in manufacturing were $18.70 (preliminary), up 0.11 percent from October 2010’s $18.68 (preliminary), and up 1.74 percent from November 2009’s $18.38.

    (BLS/DOL Employment data from “The Employment Situation, USDL 10-1662,” released December 3, 2010; next release is January 7, 2011)
    http://www.bls.gov/news.release/pdf/empsit.pdf

       

Manufacturing Wage Rates (Quarterly, Yearly) updated

  • During the third quarter of 2010, hourly compensation from previous quarter, annual rate (revised) was up 1.6 percent in total manufacturing, up 0.8 percent in durable manufacturing and up 2.4 percent in nondurable manufacturing.

  • In the third quarter of 2010, hourly compensation of all manufacturing workers increased 1.0 percent (revised), compared to a 5.2 percent increase during the third quarter of 2009. Real hourly compensation in the total manufacturing sector decreased 0.3 percent (revised) in the third quarter of 2010, compared to 6.9 percent increase in the third quarter of 2009.

    (BLS/DOL Productivity data from “Productivity and Costs, Third Quarter 2010, Revised,” USDL 10-1661, released December 1, 2010; next release is February 3, 2010)
    http://www.bls.gov/news.release/pdf/prod2.pdf

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Manufacturing Profits

  • In the second quarter of 2010, manufacturing profits increased 10.7 percent, or $26.7 billion, to $277.1 billion from $250.4 billion in the first quarter. Compared with second quarter profits of 2009, manufacturing profits were up $137.4 billion in the second quarter of 2010. (Note: The manufacturing profits for third quarter 2010 will be updated in the next release.)

  • Third quarter 2010 profits for all non-financial industries (manufacturing being a subcategory) increased 1.7 percent from the second quarter of 2010 to $1,051.6 billion.

    (BEA/DOC GDP data from “Gross Domestic Product and Corporate Profits, BEA 10-54,” released November 23, 2010; next release is December 22, 2010)
    http://www.bea.gov/newsreleases/national/gdp/2010/pdf/gdp3q10_2nd.pdf

       

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Manufacturing Employment updated

  • In November, 2010, manufacturing employment went down, with a decrease of 13,000 jobs.

  • In November, durable goods manufacturing lost 5,000 jobs with decrease in nonmetallic mineral products (-2,700), furniture and related products (-2,400), transportation equipment (-1,700), electrical equipment and appliances (-1,300), miscellaneous manufacturing (-400), and primary metals (-200). Job gains occurred in machinery (1,700), fabricated metal products (1000), computer and electronic products (700), and wood products (600).

  • In November, nondurable goods manufacturing lost 8000 jobs, with decreases in chemicals (-1,900), beverages and tobacco products (-1,700), paper and paper products (-1,600), textile product mills (-1,400), food manufacturing (-800), apparel (-800), and textile mills (-100). Job gains occurred in plastics and rubber products (600), petroleum and coal products (200), and leather and allied products (100). There was no change in employment in printing and related support activities.

  • The manufacturing employment of 11.6 million workers represents 8.9 percent of total non-farm employment.

    (BLS/DOL Employment data from “The Employment Situation, USDL-10-1662,” released December 3, 2010; next release is January 7, 2011) http://www.bls.gov/news.release/pdf/empsit.pdf

       

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Manufacturing Production

  • In October 2010, manufacturing production was up 0.5 percent from previous month and was 6.1 percent above its year-earlier level.

  • Production of durable goods was up 0.9 percent from previous month. The durable industry that registered increases in output included wood products (2.5 percent), electrical equip., appliances and components (2.2 percent), nonmetallic mineral products (2.0 percent), motor vehicles and parts (1.6 percent), machinery (1.4 percent), furniture and related products (0.8 percent), computer and electronic products (0.7 percent), miscellaneous (0.5 percent), fabricated metal products (0.3 percent), and aerospace and miscellaneous transportation equipment (0.2 percent). Primary metal (-0.4 percent) is the only durable manufacturing industries that registered decrease in output.

  • Production of nondurable goods was up 0.2 percent from previous month. The nondurable manufacturing industries that registered increases in output included apparel and leather (2.4 percent), food, beverage, and tobacco products (0.8 percent), paper (0.6 percent), and plastics and rubber products (0.2 percent). The nondurable industry that registered decreases in output included petroleum and coal products (-0.7 percent), printing and support (-0.6 percent), textile and product mills (-0.2 percent), and chemical (-0.1 percent).

  • Index for other manufacturing industries (non-NAICS) remained the same.

    (Federal Reserve Statistical data from “Industrial Production and Capacity Utilization, G17 (419),” released November 16, 2010; next release is December 15, 2010)
    http://www.federalreserve.gov/releases/g17/Current/g17.pdf

       

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Manufacturing Capacity Utilization

  • In October 2010, manufacturing industries (NAICS based) operated at 73.0 percent of capacity, 6.0 percentage points below their 1972-2009 average of 79.0 percent and 0.4 percent points higher than their revised capacity utilization level in September 2010.

  • In October 2010, durable manufacturing, capacity utilization operated at 70.7 percent capacity, up 0.5 points from previous month (revised). Increased capacity utilization was registered in wood products (1.9 points), electrical equip., appliances, and components (1.7 points), nonmetallic mineral products (1.2 points), machinery (1.1 points), motor vehicles and parts (1.1 points), furniture and related products (0.8 points),fabricated metal products (0.3 points), miscellaneous (0.1 points), and computer and electronic products (0.1 points). Decreased capacity utilization was demonstrated in primary metal (-0.4 points). There was no change in capacity utilization in aerospace and miscellaneous transportation equipment.

  • In October 2010, non-durable manufacturing, capacity utilization increased 0.2 percentage points in from previous month (revised) to 75.8 percent. Increased capacity utilization was registered in apparel and leather (2.4 points), food, beverage, and tobacco products (0.6 points), paper (0.6 points), textile and product mills (0.1 points), and plastics and rubber products (0.1 points). Decreased capacity utilization was only registered in petroleum (-0.5 points), and printing and support (-0.2 points). There was no change in capacity utilization in Chemical.

  • The index for other manufacturing industries (non-NAICS) remained unchanged.

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

       

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Manufacturing Productivity updated

  • Manufacturing sector productivity (Revised) rose 0.6 percent in the third quarter of 2010, as output increased 4.2 percent and hours increased 3.6 percent. Productivity was down 0.5 percent in the durable goods industries and up 3.2 percent in the nondurable goods industries. Unit labor costs in manufacturing increased 1.0 percent in the third quarter of 2010 and fell 2.9 percent over the last four quarters.

  • In durable goods industries, productivity (revised) was down 0.5 percent from previous quarter, as output increased 6.0 percent, while hours worked increased 6.5 percent.

  • In nondurable goods industries, productivity (revised) was up 3.2 percent from previous quarter, as output increased 2.2 percent, while hours worked decreased 0.9 percent.

    (BLS/DOL Productivity data from “Productivity and Costs, Third Quarter 2010 Revised,” USDL 10-1661, released December 1, 2010; next release is February 3, 2010)
    http://www.bls.gov/news.release/pdf/prod2.pdf

       

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Manufacturing Trade Updated

  • Year to date October 2010, U.S. manufactured goods exports accounted for 80.6 percent of all U.S. exports of goods, compared with 81.8 percent a year ago.

  • Manufactured goods exports in October were 5.9 percent higher than the previous month. Imports were also up 4.1 percent.

  • The year to date October 2010 trade deficit in manufactured goods of $338.5 billion was $75.6 billion more when compared with $262.9 billion a year ago.

    (Census/BEA/DOC Foreign Trade Statistics data from “U.S. International Trade in Goods and Services, CB10-185, BEA10-56, FT-900(10-10),” released December 10, 2010; next release is January 13, 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 October, also down two of the last three months, decreased $1.8 billion or 0.9 percent to $196.8 billion. This followed a 0.1 percent September increase.

  • In October, shipments increased in electrical equipment, appliances, components (0.2 percent), and fabricated metal products (0.2 percent). Shipment decreased in machinery (-3.6 percent), computer and electronic products (-1.9 percent), transportation equipment (-0.7 percent), and primary metals (-0.4 percent).

    (Census Bureau/DOC data from “Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders (M3-1(10)-10, CB10-176),” November 24, 2010; next release is December 23, 2010)
    http://www.census.gov/manufacturing/m3/

       

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Manufactured Goods Prices

  • In October 2010, the Producer Price Index (PPI) for finished goods, except foods and energy, decreased by 0.6 percent compared to previous month.

  • The index for finished energy goods was up 3.7 percent from previous month.

  • A seasonally adjusted increase of price from September to October was registered in liquefied petroleum gas (10.4 percent), gasoline price (9.8 percent), No. 2 diesel fuel (5.6 percent), home heating oil and distillates (5.1 percent). However, a seasonally adjusted decrease of price was registered in residential gas (-2.2 percent), and residential electric power (-1.1 percent).

    (BLS/DOL data from “Producer Price Indexes, USDL 10-1599,” released November 16, 2010; next release is December 14, 2010)
    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 November for the 16th consecutive month, and the overall economy grew for the 19th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®.

  • Manufacturing continued to grow in November and at an accelerated rate as the PMI registered 56.6 percent, a decrease of 0.3 percentage points when compared to October's reading of 56.9 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 November were: New Orders decreased 2.3 points to 56.6, Production decreased 7.7 points to 55.0, Employment decreased 0.2 points to 57.5, Inventories up 2.8 points to 56.7, and Supplier Deliveries up 6.0 points to 57.2.

    U.S. Industries Reporting Growth in November 2010

    • Computer & Electronic Products
    • Petroleum & Coal Products
    • Apparel, Leather & Allied Products
    • Machinery
    • Fabricated Metal Products
    • Plastics & Rubber Products
    • Transportation Equipment
    • Electrical Equipment, Appliances & Components
    • Chemical Products
    • Primary Metals

    (Institute for Supply Management, data released December 1, 2010; next release is January 3, 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