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Recent jobs reports kindle optimism for manufacturers

August 9, 2016

Any incremental climb in manufacturing jobs is good news. But when the US Department of Labor announced 255,000 new jobs were created in July, that was very good news. For an industry that has seen more than its share of disappointing statistics, the recent report from the Department Labor is especially welcomed by growth-hungry manufacturers. Many major news organizations jumped on the stat with optimistic editorials.

workers-bridge-construction_iStock_gl497x373The Washington Post (Aug 5) reported America’s labor market “is surging again” after a weak spring. Standard & Poor chief US economist Beth Ann Bovino said, “The job market delivered a ‘solid sequel’ to the blockbuster hiring in June, leaving weak performance in May a ‘distant memory.’ ”

The Associated Press (Aug 5) reported that the years of steady job gains “have finally begun to benefit a wider range of Americans, including those with less education and in lower-paying jobs.” The AP said the second straight month of robust hiring “pointed to employer confidence that suggested the economy is powering through a slump that struck early this year.”

But IndustryWeek (Aug 5) pointed out that manufacturing gained only 9,000 new jobs in July, according to the Bureau of Labor Statistics (BLS), a small portion of the 222,000 new jobs added across all sectors. IndustryWeek quotes economist and researcher Alan Tonelson as saying, “While manufacturing wages increased again to its fourth straight yearly current-dollar increase of more than 3%, manufacturing’s share of total U.S. employment fell to a record low 8.52%.”

Why is manufacturing seeing such a small portion of the total jobs gain and losing by percentage? According to Powder & Bulk Solids (Aug 5), the BLS said the numbers for major industries, including construction, manufacturing, wholesale trade, retail trade, and information, exhibited “little or no change” in July. National Association of Manufacturers (NAM) President Jay Timmons said in a statement, “While the numbers continue to improve, the fact is that our economy remains nowhere near its full potential. To grow jobs in America, manufacturers need their products sold to more markets.”

While the White House cautiously celebrated Friday’s job report, it commented that “more work needs to be done,” according to the Washington Examiner (Aug 8). White House Council of Economic Advisers Chairman Jason Furman said, “US businesses have now added 15 million jobs since private-sector job growth turned positive in early 2010, and the longest streak of total job growth on record continued in July.”

The National Association of Manufacturers says the US has averaged 273,500 net new workers over the past two months, a decent jump over the 151,000 average seen over the first five months of 2016. NAM notes that, beyond jobs, sentiment among manufacturers also has improved of late. It reports:

  • The Institute for Supply Management’s Manufacturing Purchasing Managers’ Index reported that manufacturing activity expanded for the fifth straight month in July. This suggests that manufacturers are doing better today than in the October to February timeframe. “The boost has come from relatively strong expansions in new orders and production, with the latter growing at its fastest pace in 12 months.”
  • Personal spending increased 0.4% in June and jumped 7.5% at the annual rate in the second quarter. Over the past 12 months, personal spending has increased 3.7%, a healthy pace that makes consumption one of the bright spots in the economy.
  • Personal incomes were also higher in June, up 0.2%, with year-over-year growth of 2.7%

These stats, although not as dramatic as manufacturers would like to see, do indicate economic movement in the right direction. Successes, even moderate ones, need to be celebrated and embraced. Recall former US President Franklin Roosevelt’s classic statement in his first inaugural address, “The only thing we have to fear is fear itself.” Perhaps we can turn this truism into one that will be equally prophetic for manufacturers: “The only thing we have to worry about is worry itself.”

Manufacturing is on an upswing, improving productivity, profitability, and the ability to meet demands of customers. We know it. Worry over the precise rate of improvement will only dampen the enthusiasm, slow the momentum, dilute the success, spawn more cynicism. While we do need to be realistic, we can also chose to focus on the opportunities, learn from successful colleagues, and have faith in our own resourcefulness.

Celebrating the gains, such as the new jobs in July, will help propel manufacturing forward, as will the positive work of innovative manufacturers who are overcoming challenges and pursuing new technologies.

— Pam Records, senior marketing manager, Infor Manufacturing

 

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