The good employment news for manufacturing in the July jobs report stopped abruptly with the sector's 15,000 monthly gain. In part because manufacturing's monthly job increases were revised down from April through June by a total of 4,000, industry's share of total U.S. employment fell to a record low of 8.69 percent. In addition, factories entered their worst eight-month job-creation stretch since April-December, 2013. Manufacturing's pre-inflation wages recovered sequentially in July, but longer-term – especially during the current economic recovery – industry has remained a major wage laggard.
Here’s my analysis of the latest monthly (July) manufacturing figures contained in this morning’s employment report from the Bureau of Labor Statistics:
- The 15,000 net new manufacturing jobs created in July represented the sector's best monthly advance since January, but downward revisions for the three previous months helped drag industry's share of total nonfarm employment down to its lowest level ever.
- Manufacturing now represents 8.69 percent of all nonfarm jobs – the Labor Department's U.S. jobs universe – due in part to the July figures, and to the revisions of June's previously reported 4,000 rise to 2,000, May's 7,000 increase to 6,000, and April's 1,000 improvement to no gain.
- At the sector's recessionary employment bottom (February and March, 2010), manufacturing jobs accounted for a much higher percentage of the official U.S. jobs universe – 10.69 percent and 10.67 percent, respectively.
- Nor was the decent July performance enough to prevent manufacturing from entering its worst eight-month job creation stretch (68,000) since April-December 2013's 72,000.
- The 159,000 year-on-year manufacturing jobs gains revealed in the July figures were slightly better than June's downwardly revised 158,000, but much lower than January's 216,000. The July year-on-year rise also trailed the previous July's 208,000 gain, but were much greater than the paltry 18,000 increase achieved from July, 2012 to July, 2013.
- Since manufacturing hit that last 2010 employment bottom, the sector has regained 897,000 (39.12 percent) of the 2.293 million jobs it lost during the recession and its aftermath. By contrast, the private sector overall lost 8.801 million jobs from the recession's December, 2007 onset through its February, 2010 absolute employment low. Since then, it has since increased net employment by 12.975 million.
- In fact, whereas total private sector employment is now 3.60 percent higher than at the recession's beginning, manufacturing employment is still 10.16 percent lower.
- Manufacturing wages bounced back in July on a monthly basis in pre-inflation terms (by 0.24 percent) after dipping in June (by an unrevised 0.20 percent). The July gain even topped that for the private sector overall (0.20 percent).
- Year-on-year, though, manufacturing remained a wage laggard. From July, 2014 through last month, pre-inflation manufacturing wages rose only by 1.45 percent – more slowly than the 2.13 percent improvement for the whole private sector. The latest yearly manufacturing wage gain also trailed July, 2013-2014's 1.97 percent, and July, 2012-2013's 1.71 percent. In January, year-on-year manufacturing wages increased by 2.23 percent.
- Since the current economic recovery began, pre-inflation manufacturing wages are up less (9.43 percent) than private sector wages (12.77 percent).
- Manufacturing's wage performance has been even worse after adjusting for inflation. The latest Labor Department figures are from June, and will be updated later this month. But they showed that in real terms, manufacturing wages fell sequentially by 0.57 percent – the second straight such drop – and are down on net since January.
- Real total private sector wages dropped on a monthly basis in June, too, but by a smaller 0.38 percent. These wages declined in May as well, and are also lower than in January.
- Year-on-year, inflation-adjusted manufacturing wages rose in June by only 0.85 percent – less than May's 1.73 percent, which was upwardly revised from 1.63 percent. June overall private sector real wages were up by more than twice as much – 1.75 percent.
- Moreover, as of June, inflation-adjusted manufacturing wages are down by 1.59 percent since the recovery officially began in mid-2009. Real wages for the entire private sector are up 1.65 percent during this period.
DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer