NAM: Monday Economic Report
Manufacturing employment rose by 37,000 in August. Year to date, total employment in the sector has risen by a solid 190,000, with 12,421,000 manufacturing workers in August. There remained 378,000 fewer manufacturing employees relative to pre-pandemic levels.
There was significant upward pressure on wages, with manufacturers continuing to cite difficulties in finding workers. The average hourly earnings of production and nonsupervisory workers in manufacturing rose 0.5% to $24.01 in August, with a 5.0% increase over the past year. That matches the year-over-year gain in June, which was the fastest wage growth since September 1982.
Nonfarm payroll employment rose by 235,000 workers in August, well below consensus expectations and the weakest since January. The unemployment rate dropped from 5.4% in July to 5.2% in August, a post-pandemic low, and the labor force participation rate was unchanged at 61.7% for the month.
The ISM® Manufacturing Purchasing Managers’ Index® expanded robustly once again, with the headline index edging up from 59.5 in July to 59.9 in August. Demand and output rose at very solid paces, but respondents continued to cite concerns with supply chain disruptions, rising costs and workforce shortages. Price data stabilized somewhat but remained highly elevated.
Manufacturing activity softened in the Dallas Federal Reserve Bank’s district softened in August, mirroring other regional surveys, even as respondents remained upbeat in their outlook.
New orders for manufactured goods rose 0.4% to a record $508.1 billion in July but slowing from the 1.5% gain in June. There were sharply reduced orders for nondefense aircraft and parts, which can be highly volatile month to month. Excluding transportation equipment, factory orders and durable goods orders were both up 0.8% in July.
Overall, the manufacturing sector continues to expand strongly, despite lingering supply chain and pricing pressures, with new factory orders soaring 8.5% year to date. Core capital goods orders increased to $76.6 billion in July, a record high, rising 6.9% so far in 2021.
Private manufacturing construction spending was changed little in July and remained down 2.6% from pre-pandemic levels. Total private nonresidential spending decreased 0.2% in July, and since February 2020, activity has fallen 12.0%.
The U.S. trade deficit declined from a record $73.23 billion in June to $70.05 billion in July. Goods exports increased to an all-time high for the month, with goods imports edging down from the prior month’s record pace.
According to the latest non-seasonally adjusted data, U.S.-manufactured goods exports totaled $642.16 billion through the first seven months in 2021, soaring 18.80% from $540.53 billion year to date in 2020.
Consumer confidence fell to the lowest level since February, declining from 125.1 in July to 113.8 in August, according to the Conference Board. Americans felt less upbeat about the current and future economy, largely on concerns about the spread of the delta variant and on inflationary worries.