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Chrysler workers install a windshield in a Ram 1500 truck in Warren Michigan

A Banner Month for Manufacturing Jobs

Feb. 5, 2016
According to new numbers from the Bureau of Labor Statistics, manufacturing added 29,000 new jobs in January after a net gain of just 33,000 in all of 2015.

The good news is that the American unemployment rate dropped below 5% for the first time since February 2008, according to new numbers released Friday by the Bureau of Labor Statistics. The better news is that manufacturing created almost as many new jobs in January as it did in all of 2015.

There is some not-as-good news, too, of course: Hiring is slowing down, evidenced by the addition of 151,000 new jobs in January, a little more than three-quarters of the 197,000 in the forecast. China and oil are still weak, and recent reports indicated that the economy might have hit an air pocket after a strong year for job creation — 2.65 million new jobs in 2015, and close to 14 million the last six years — but these numbers indicate an economy chugging along. Call it a B or B-minus.

“For those looking for confirmation that the U.S. economy may be headed for a recession, this morning’s report will surely disappoint,” TD Economics senior economist Michael Dolega said. “Sure, the headline payroll gain slowed from the red-hot fourth-quarter pace, but much of it was to be expected given the overly warm start to winter.”

The weakness, Dolega said, appears concentrated in temporary help, which cut about 25,000 of the jobs it added in December.

The report was markedly better for manufacturing than for plenty of other industries, with 29,000 new jobs reported in January. (A little comparison: manufacturing added just 33,000 jobs in all of 2015, and all of them popped up in the fourth quarter.) Four straight months with a net gain — and the strongest single month since November 2014 — are worth at least a little celebration.

“The stronger-than-expected gains in manufacturing employment provide a hint of optimism for a sector that has been hard-hit by global headwinds over the course of the year,” National Association of Manufacturers chief economist Chad Moutray said. “The reduction in the unemployment rate suggests that the labor market continues to move in the right direction.

“Pro-manufacturing policies … will help ensure manufacturers continue to grow and compete.”

The quick numerical breakdown: Durable goods manufacturers added 17,000 jobs, while nondurable added 12,000. Average weekly earnings increased 0.56% to $1,042.33, with a year-over-year increase of 1.8% (though that can relate directly to a slight increase in hours, from 40.6 to 40.7). Overtime hours remained at 3.3 per week. The industry unemployment rate dropped to 4.3%, down from 5.2% in January 2015.

In related news, new U.S. factory orders slumped in December, down 2.9% and dropping for the fourth time in five months. Machinery orders were particularly hard-hit, plummeting 5.6% with a 78.2% drop in orders for mining, oil field and gas field equipment.

“The decline in the unemployment rate and surprisingly soft gains for manufacturing might seem to undercut” the argument to hold off raising short-term rates until April or June, Moutray said, and that provides “signs of a possible turnaround.”

Will the Federal Reserve raise those rates at its March meeting? Will manufacturing add more new jobs for a fifth straight month in February? Are we headed for a plateau, a turnaround, or something else? If nothing else, stay tuned.

About the Author

Matt LaWell | Staff Writer

Staff writer Matt LaWell explores news in manufacturing technology, covering the trends and developments in automation, robotics, digital tools and emerging technologies. He also reports on the best practices of the most successful high tech companies, including computer, electronics, and industrial machinery and equipment manufacturers.

Matt joined IndustryWeek in 2015 after six years at newspapers and magazines in West Virginia, North Carolina and Ohio, a season on the road with his wife writing about America and minor league baseball, and three years running a small business. He received his bachelor's degree in magazine journalism from Ohio University.

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