NAM: Moday Economic Report
Manufacturing employment rebounded somewhat, rising by 23,000 in May after falling by a downwardly revised 32,000 in April. There remained 509,000 fewer manufacturing employees relative to pre-pandemic levels, with 12,290,000 employees in May. Despite job growth for the month, businesses continue to cite difficulties in finding enough talent. There is optimism for continued growth moving forward, with job openings continue to soar (see graph).
The average hourly earnings of production and nonsupervisory workers in manufacturing rose to $23.52 in May, with a 3.3% increase year-over-year but jumping 4.5% since February 2020.
Nonfarm payroll employment rose by 559,000 workers in May, essentially doubling the increase of 278,000 in April, but the consensus was for a gain of roughly 700,000. The U.S. economy continues to have 7,629,000 fewer workers today than in February 2020. The unemployment rate declined from 6.1% in April to 5.8% in May, a 14-month low.
Initial unemployment claims fell to a post-pandemic low of 385,000 for the week ending May 29 but continuing claims increased. There were 15,435,982 Americans receiving some form of unemployment insurance benefit for the week ending May 15.
The ISM® Manufacturing Purchasing Managers’ Index® edged up from 60.7 in April to 61.2 in May, buoyed by stronger demand. With ongoing supply chain disruptions and workforce challenges, supplier deliveries were the slowest since April 1974, with indices for the backlog of orders and customer inventories notching unfortunate new records. In addition, prices rose at the fastest rate since July 2008.
The Dallas Federal Reserve Bank’s May manufacturing survey also reported solid expansions in activity and in the outlook, even as raw material costs soared at the fastest pace on record.
New orders for manufactured goods fell 0.6% in April, but excluding transportation equipment, factory orders rose 0.5%. Overall, the manufacturing sector continues to expand strongly, increasing 4.8% since February 2020, or 7.8% with transportation equipment excluded.
New orders for core capital goods—a proxy for capital spending in the U.S. economy—increased 2.2% in April to a new record high, with a robust 15.5% growth rate over the past 14 months.
Private manufacturing construction spending rose 0.4% in April, increasing to the best reading since July 2020 and providing some optimism in the construction outlook. With that said, private manufacturing construction has fallen 6.0% since February 2020.