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Manufacturing Narrowly Avoids A Second Month of Job Losses: Trade Deficit Narrows

March 6, 2020
The U.S. economy added more than a quarter of a million jobs in February. Manufacturing added 15,000.

Manufacturing employment in February erased jobs lost in January, but only just. According to the latest Department of Labor jobs report, the manufacturing sector added 15,000 jobs last month after losing 12,000 in January. The report is just the latest sign that manufacturing employment is strangely disconnected from the growth in the rest of the economy, which added 273,000 total nonfarm jobs.

Manufacturing jobs producing durable goods accounted for 11,000 of the jobs gained, including 6,800 jobs producing parts for motor vehicles. Nondurable good accounted for the other 4,000 jobs added. The data from the Bureau of Labor Statistics is still preliminary.

Scott Paul, President of the Alliance for American Manufacturing, said it was “good to see” manufacturing recover from a “bad start,” but expressed worry about how it was still underperforming relative to the economy at large. “Since February 2019, manufacturing has only added 31,000 jobs in an economy that has generated 2.5 million jobs,” he said in a statement.

In other positive news for the sector, the U.S. trade deficit narrowed to $45.3 billion, from $46.1 billion in January, according to data from the Commerce Department released March 6. Imports from China decreased to the lowest level since 2010 and exports edged up. The goods deficit fell $2.1 billion to $23.7 billion in January.

The jobs gain could reflect increased sector confidence following the dual passage in January of two significant trade deals. The phase-one trade deal with China, signed January 15, included one-off agreements by China to purchase American manufactured goods and represented a de-escalation in runaway tariff threats. The USMCA, signed by President Trump January 29, includes measures intended to level the playing field between automakers in Mexico and the United States, as well as a rules-of-origin clause that requires 75% of a vehicle’s parts to be manufactured in North America.

It’s less likely to include the full impact of what has only emerged as a problem for the manufacturing sector towards the end of February: the appearance of the novel coronavirus COVID-19. The outbreak has shuttered factories in China, cancelled industry events and thrown supply chains into disarray. It’s also likely to have an impact on the trade deficit by weakening exports from China as their factories slowly return to full production following a longer-than-normal Lunar Year holiday.

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