• AIM Team

NAM: Monday Economic Report

  • Manufacturing employment fell in January for the first time since April, with the sector losing 10,000 workers to begin the new year. This suggests that broader macroeconomic weaknesses related to the continued spread of COVID-19 have extended to the manufacturing sector, which had been a bright spot in recent months. Over the past 12 months, manufacturing employment has fallen by 575,000 workers.

  • The U.S. economy added 49,000 workers in January, bouncing back somewhat after declining by 227,000 in December. There are 9,603,000 fewer nonfarm payrolls today than one year ago. The unemployment rate fell from 6.7% in December to 6.3% in January.

  • In the latest data, private nonfarm employment remains 93.5% of what was experienced at the beginning of the recession in February 2020. The current recession is much deeper than in recent downturns, with nonfarm payrolls plummeting 14.7% in the first two months (see chart).

  • The ISM® Manufacturing Purchasing Managers’ Index® slowed in January but continued to expand solidly, declining from 60.5 in December to 58.7 in January. New orders and production growth remained robust, but respondents cited lingering supply chain disruptions, and raw material costs rose at the fastest pace since April 2011.

  • Factory orders rose 1.1% in December, increasing for the eighth straight month but declining 0.8% year-over-year. At the same time, durable goods have rebounded strongly since the pandemic. Over the past 12 months, new orders for durable goods have risen 1.9%, but with transportation equipment excluded, sales increased a solid 7.0% year-over-year.

  • Encouragingly, new orders for core capital goods—a proxy for capital spending in the U.S. economy—rose 0.7% to $72.0 billion in December, a new record. More importantly, core capital goods orders have risen a robust 8.0% over the past 12 months.

  • The U.S. trade deficit declined from $69.01 billion in November, an all-time high, to $66.61 billion in December, with the increase in goods exports outstripping the gain in goods imports.

  • Trade volumes were notably lower in 2020 as COVID-19 and a recession battered the global economy. U.S.-manufactured goods exports dropped roughly 15% in 2020 relative to 2019.

  • The Private manufacturing construction spending dropped 5.6% in December to the lowest level since September 2014. These data fell in every month of the second half of 2020, and private construction spending in the sector plummeted 17.6% year-over-year.

  • Manufacturing labor productivity rose 3.0% at the annual rate in the fourth quarter, boosted by continued rebounds in output. Yet, labor productivity in the sector edged down 0.2% in 2020 overall, with manufacturing output down 6.5% and unit labor costs up 7.4%.


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