NAM: Monday Economic Report
Manufacturers added 29,000 workers in August, slowing but extending the 41,000 gain in employment in July. Despite increases over the past four months, the labor market remains well below its pre-COVID-19 pace, with manufacturing employment down 720,000 since February. As such, sizable labor market challenges continue despite recent progress.
The current outlook is for manufacturing employment to bounce back to roughly 12,350,000 workers by year’s end, up from 12,132,000 in August but down from the prepandemic pace of 12,852,000 in February.
Meanwhile, the U.S. economy added 1,371,000 workers in August, with the unemployment rate dropping for the fourth straight month to 8.4%.
Initial unemployment claims declined from 1,011,000 for the week ending Aug. 22 to 881,000 for the week ending Aug. 29. Overall, initial claims have decelerated since peaking at 6,867,000 for the week ending March 28, averaging 1,031,600 over the past five weeks.
The ISM® Manufacturing Purchasing Managers’ Index® expanded in August at the fastest pace since November 2018, with the sector continuing to recover from sharp declines from COVID-19 disruptions in the spring. New orders grew at the best rate since January 2004, even as hiring declined for the 13th straight month.
On a regional level, the Dallas Federal Reserve reported that manufacturing activity continued to stabilize, expanding for the first time since February, with respondents optimistic about the next six months.
New orders for manufactured goods increased 6.4% in July, or 2.1% with transportation equipment excluded. Over the past 12 months, factory orders have fallen 4.9%, but encouragingly, core capital goods—a proxy for capital spending in the economy—have declined just 0.2% year-over-year after recent rebounds. Shipments rose 4.6% in July.
The U.S. trade deficit rose to the highest level since July 2008, with the goods trade deficit soaring to a new record. Growth in goods imports outpaced the gains in goods exports. The data continue to reflect the drop-off in trade activity year to date, with U.S.-manufactured goods exports down 17.3% through the first seven months of 2020 relative to the same period in 2019.
Private manufacturing construction spending edged up 0.2% in July, but on a year-over-year basis, private construction spending among manufacturers has decreased 9.9% since July 2019.