Unemployment rate hits historic low, but manufacturing has sluggish year

The latest reports on the economy show mixed results. The Bureau of Labor Statistics (BLS) reported that 266,000 non-farm payrolls were created in November, pushing the unemployment rate to a historically low 3.5%. Government data released today showed the United States added far more jobs than expected in November, “relieving concerns that one of the brightest spots in the economy may have started to run out of steam,” said Business Insider in its Markets report.

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Manufacturing employment also increased in November, noted the Alliance for American Manufacturing (AAM). The sector gained 54,000 jobs, according to the BLS, with the bulk of growth coming from automotive jobs. AAM’s President Scott Paul commented: “With only one month left in 2019, Trump’s promise that manufacturing jobs will boom has sputtered. November’s jobs number was aided by UAW workers securing a new contract and returning to the factory floor.

“Overall, 2019 factory job growth has been incredibly weak, lagging well behind 2018 and underperforming [compared with] the rest of the economy. While there has been periodic bluster about policies to boost infrastructure and stop China’s cheating, no real progress has been made to date. American workers deserve better from the administration and Congress,” said Paul.

Nick Bunker, Research Director at Indeed Hiring Lab, commented to Business Insider, that the high number of jobs added in November doesn’t tell the whole story. “You might forget that the story for most of this year was that the economy was slowing down,” he said. “The slowdown did happen, but we can move into 2020 with a bit more optimism.”

Business Insider reported that while wage growth continued to outpace inflation last month, it “remained stubbornly below what would be expected with an unemployment rate at its lowest level in half a century. Average hourly earnings rose 3.1% year-over-year in November, a slight uptick from a month earlier but short of the peak growth levels seen in early 2019.”

November’s Purchasing Managers Index from the Institute for Supply Management (ISM), released on Dec. 2, showed yet another contraction to 48.1 from October’s 48.3. In fact, most of the index measurements were in the “contracting” mode even though the index showed the overall economy “growing.”

New orders for November fell to 47.2 from October’s 49.1. New export orders also fell from 50.4 (growing) in October to 47.9 (contraction) in November. Production’s contraction slowed from October’s 46.2 to 49.1 in November. Inventories contracted faster, from 48.9 in October to 45.5 in November, and customer inventories fell to levels considered “too low,” from 47.8 in October to 45.0 in November. Order backlogs also dropped 1.1% in November to 43.0.

Comments from respondents to ISM’s November survey included this one from a machinery supplier: “Demand has stabilized for the last half of [the fourth quarter], and production will be stable for the rest of this year.”

A respondent from the plastics and rubber products sector commented, “Heading into the holiday season, we are seeing the backlog decrease, as new orders for 2020 seem lighter than in past years.”

A new report from ResearchAndMarkets (Global Plastic Processing Machinery Markets Report 2019: 2017-2018 Data & CAGR Projections 2019-2023), noted that “increasing demand for processed food and beverages, followed by increasing requirements for packaging, is fueling the overall growth in the plastics processing machinery market. The increasing demand for plastics in a variety of applications is expected to fuel growth of the plastics processing machinery global market. Accuracy, reliability, and energy efficiency play an important role in the growth of plastic processing machinery global market.”

Image: Hywards/Adobe Stock

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