NAM: Monday Economic Report
Manufacturing employment increased by 21,000 in February, rising for the ninth time in the past 10 months. Overall, the manufacturing sector remains a bright spot in the U.S. economy, with expanding demand and production and hiring moving in the right direction. With that said, manufacturing employment has fallen by 561,000 workers over the past 12 months.
The average hourly earnings of production and nonsupervisory workers in manufacturing inched up from $23.18 in January to $23.19 in February, with a 3.1% increase over the past year, up from $22.50 in February 2020 (see chart).
Meanwhile, the U.S. economy added 379,000 nonfarm payroll workers in February, up from 166,000 in January. The unemployment rate edged down to 6.2% in February.
The ISM® Manufacturing Purchasing Managers’ Index® expanded at the fastest pace in three years, with strong growth for new orders, production and exports and hiring strengthening for the third straight month.
With that said, supply chain disruptions remain a significant challenge. The backlog of orders soared to the highest level since April 2004, and raw material costs rose at the swiftest rate since May 2008 in the Institute for Supply Management® report.
New orders for manufactured goods rose 2.6% in January, increasing for the ninth straight month. Over the past 12 months, factory orders have risen 2.8%—an impressive rebound after demand for manufactured goods plummeted 23.0% between February and April 2020.
At the same time, new orders for core capital goods—a proxy for capital spending in the U.S. economy—rose 0.4% to $72.9 billion in January, a new record. More importantly, core capital goods orders have risen a robust 8.3% over the past 12 months.
After falling for six straight months to the lowest level since September 2014, private manufacturing construction spending grew 4.9% to $65.60 billion in January. Hopefully, this is the beginning of a recovery in construction for the sector. On a year-over-year basis, private construction spending in the sector has plummeted 14.7% from $76.88 billion in January 2020.
The U.S. trade deficit rose from $66.97 billion in December to $68.21 billion in January. Goods imports increased to a new record pace, more than outpacing the rise in goods exports, which was the best reading since February 2020. U.S.-manufactured goods exports totaled $81.66 billion in January, using non-seasonally adjusted data, dropping 5.3% from $86.25 billion in January 2020.
Manufacturing labor productivity rose 5.0% at the annual rate in the fourth quarter with strong rebounds in output, both for durable and nondurable goods, according to revised data.