NAM: Monday Economic Report
Manufacturing added 38,000 workers in December, rising for the eighth straight month and making the sector one of the bright spots in an otherwise disappointing (but expected) report. Yet, the manufacturing sector lost 557,000 workers in 2020, the largest annual decline since 2009 and ending three years of gains.
The U.S. economy lost 140,000 workers in December, the first monthly decline in nonfarm payroll employment since April and weighed down by weaknesses in the service sector and state and local government. The unemployment rate remained flat at 6.7% in December.
Initial unemployment claims totaled 787,000 for the week ending Jan. 2. First-time claims have averaged 784,250 over the past 12 weeks, highlighting just how little these data have moved in the past three months. The data remain elevated, despite significant progress since peaking at 6,867,000 for the week ending March 28.
The Institute for Supply Management® reported that manufacturing activity continued to expand solidly in December, ending the year at the fastest pace of growth since August 2018. Growth in new orders matched the pace in October, which was the best since January 2004, and hiring expanded for just the second time since July 2019, with some respondents noting ongoing difficulties in finding talent.
The ISM® report also noted lingering supply chain disruptions remain, despite solid progress since April in these data, including supplier labor and transportation constraints. Raw material costs rose at the swiftest rate since May 2018.
New orders for manufactured goods rose 1.0% in November, increasing for the seventh straight month. Despite notable gains since the spring from COVID-19 disruptions, new orders remain 1.9% below the pre-pandemic pace.
Encouragingly, the durable goods data have rebounded strongly since the pandemic. Over the past 12 months, new orders for durable goods have increased 3.9%, but with transportation equipment excluded, sales rose a solid 4.9% year-over-year.
Private manufacturing construction spending edged up 0.1% to $69.54 billion in November. The data have stabilized but have remained little changed over the past three months, settling at a pace that remains well below what was seen before the pandemic. On a year-over-year basis, private construction spending among manufacturers has decreased 15.1% from $81.88 billion in November 2019.
The U.S. trade deficit rose from $63.11 billion in October to $68.14 billion in November, the highest since August 2006. Goods exports remain well below the pre-pandemic pace, and the service-sector trade surplus was the lowest since August 2012. U.S.-manufactured goods exports have fallen 15.7% year to date in 2020 relative to the same 11-month time period in 2019.