Manufacturing jobs reach 7-year high despite stumbling economy
Thursday, February 11, 2016
While overall jobs growth was lower than projected in January, the manufacturing sector saw gains in several key workforce measures.
According to the Bureau of Labor Statistics monthly labor report, manufacturing companies added 29,000 workers in January, the fourth consecutive month that saw an increase. That translates to 12.4 million workers in the industry, the highest number in seven years.
But it wasn't just the total number of jobs added that signaled a healthy manufacturing sector. Other metrics also pointed to a strengthening trend.
For example, average weekly hours increased slightly to 40.7 hours in January. That's significant because the length of the manufacturing work week is generally considered a leading indicator for the overall health of the economy.
Factories also paid workers more in January with the average hourly pay increasing by 8 cents to $25.61 an hour. That's a 0.3 percent increase. Weekly pay rose by $5.81 to $1,042.33.
And the workforce increase wasn't representative of just one or two sectors either — 64 percent of the 79 manufacturing industries added workers, including food manufacturing, auto-making and chemical.
While manufacturing industries saw positive gains, jobs across all sectors didn't grow at the pace analysts had predicted. Across all sectors, employers added 151,000 jobs in January, primarily in the retail and restaurant sectors. That's well below forecasts of 190,000 jobs for the month, but still enough to put the unemployment rate at 4.9 percent, the lowest in eight years.
And wages across the board grew by half a percentage point in average hourly earnings. That indicates employers are being required to pay more in order to attract and retain employees.
But given the most recent jobs report, everyone from journalists who cover the economy to economists, analysts and Fortune 500 CEOs say there's a low chance of recession in the country's future.
"So we are seeing a lot of the economic volatility, but there is still enough business out there for GE to hit its goals," said GE's CEO Jeff Immelt. For the year, Immelt projected 2-4 percent organic growth with profit-margin expansion. That's not a likely forecast if GE anticipates a recession.
GM says December was the best sales month in nearly a decade. "We know there's been a lot written about the U.S. industry being at peak levels and that a downturn is imminent," said GM CEO Mary Barra. "We, like many others, do not share this view. We believe the industry fundamentals support a continued strong U.S. industry."
A similar scenario played out at Ford, which had an 18 percent revenue increase in the fourth quarter of last year.
"We're not seeing any weakness in the consumer," said Marion Harris, the finance chief of Ford Motor Credit.
And economists at Goldman-Sachs and JP Morgan Chase predicated 2 or 2.25 percent growth in the first quarter. They put the chances of a recession at 22 percent, a figure that's just above the historical average.
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