NAM: Monday Economic Report
Manufacturing employment fell by 18,000 in April, pulling back from solid gains in the prior two months. The U.S. economy adding just 266,000 nonfarm payroll workers in April. This was a disappointing and somewhat unexpected report given the rebound in the U.S. economy, but it should not take away from the outlook for solid employment growth over the coming months.
The unemployment rate edged up from 6.0% in March to 6.1% in April, with the number of unemployed workers rising from 9,710,000 to 9,812,000. The labor force participation rate rose for the second straight month, up from 61.5% to 61.7%, an eight-month high.
Businesses continue to cite difficulties in finding enough talent, and manufacturers will need to identify 2.1 million more workers for the sector between now and 2030, according to new analysis from The Manufacturing Institute and Deloitte.
More encouragingly on the labor market front, initial unemployment claims fell to 498,000 for the week ending May 1, the lowest since the pandemic began.
The ISM® Manufacturing Purchasing Managers’ Index® pulled back from 64.7 in March, the fastest pace since December 1983, to 60.7 in April. New orders and production continued to expand very strongly, but supply chain disruptions remained a significant challenge. Prices soared at the fastest rate since July 2008, and the backlog of orders was the highest on record.
New orders for manufactured goods rose 1.1% in March. Overall, factory orders continued to rebound strongly, rising 3.3% since February 2020, or 5.7% with transportation equipment excluded. Durable goods orders increased even stronger, rising 4.3% over the past 13 months or 11.1% with transportation equipment excluded.
Likewise, new orders for core capital goods—a proxy for capital spending in the U.S. economy—increased 1.2% to $73.4 billion in March, a record high. As such, core capital goods orders have risen a robust 10.5% over the past 13 months, buoyed by confidence in the economic outlook.
Manufacturing labor productivity edged up 0.1% at the annual rate in the first quarter, sustaining the 4.5% gain in the fourth quarter. Output in the sector rose a modest 2.4% in the first quarter, but these data likely reflect supply chain disruptions in the sector.
Private manufacturing construction spending fell 1.3% from the six-month high of $70.10 billion in February to $69.16 billion in March, pulling back following two straight months of gains.
The U.S. trade deficit rose to $74.45 billion in March, an all-time high. Trade volumes were higher overall, but growth in imports (which also hit a new record) outpaced the rise in exports. The service-sector trade surplus hit the lowest level since August 2012.
U.S.-manufactured goods exports in the first quarter of 2021 were 3.52% lower than the pace seen through the first three months of 2020, using non-seasonally adjusted data.