Manufacturing ended its technical jobs recession in January, as the sector's 29,000 employment increase represented the strongest monthly rise in more than a year. Most revisions were positive, but manufacturing's year-on-year job gains (45,000) in January were still among the lowest in the last three and one half years. Nonetheless, industry's share of total nonfarm employment rose and is no longer at record low levels, and though still a recovery-era laggard, manufacturing wages showed their most strength since recessionary 2009 – aided in part by the Labor Department's latest benchmark data revisions. These changes also finally pushed inflation-adjusted manufacturing wages back above their levels at the outset of the current economic recovery.
Here’s my analysis of the latest monthly (January) manufacturing figures contained in this morning’s employment report from the Bureau of Labor Statistics:
>Manufacturing employment in January continued a recent run of generating good news, as the best monthly net increase in payrolls (29,000) since November, 2014 helped the sector exit its latest jobs recession. Prior to this morning's release, manufacturing employment had fallen on net for seven straight months – more than the two consecutive negative quarters central to most definitions of GDP recessions.
>Most of the latest manufacturing jobs revisions were positive as well. December's 8,000 increase was upgraded to 13,000, and November's previously reported 2,000 improvement now stands at 3,000. October's last reported 3,000 advance, however, was downgraded to 2,000.
>The better employment numbers also meant that manufacturing jobs are no longer at an historic low as a percentage of total non-farm jobs (the Bureau of Labor Statistics' employment universe). As of the previous jobs report, this figure stood at 8.61 percent. It has now inched up to 8.62 percent.
>Manufacturing's January year-on-year jobs performance, however, was less impressive. Industry added 45,000 new positions on net over January, 2015 levels. But this increase was one of the lowest such totals since July, 2013.
> In fact, although it topped December's upwardly revised 33,000 rise and November's similarly upgraded 42,000, it was well below October's 68,000 and September's 92,000.
>The yearly gap in job creation for January, 2016 was even greater when compared with January, 2014-15 (217,000) and January, 2013-14 (114,000).
>Since manufacturing hit its 2010 employment bottom, the sector has regained 903,000 (39.38 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 increased net employment by a shade under 14 million.
>In fact, whereas total private sector employment is now 4.58 percent higher than at the recession's beginning, manufacturing employment is still 10.11 percent lower.
>The January jobs report featured some of the best manufacturing wage numbers since the recovery began. But comparisons are complicated by the benchmark revisions to earlier data incorporated by the Bureau of Labor Statistics in its newest release.
>Manufacturing wages before adjusting for inflation increased in January by 0.31 percent on month – the fastest rate since August's 0.63 percent. That gain was also much faster than December's 0.04 percent (which itself was revised up from a 0.04 percent decrease), and helped produce a year-on-year January manufacturing wage boost of 2.56 percent. In turn, that result would have been the greatest such increase since March, 2014's 2.53 percent.
>But the unusual (0.16 percent) upward revision in December's current dollar manufacturing wage level pushed that month's year-on-year increase to 2.65 percent. That's manufacturing's best such performance since October, 2009 (3.03 percent).
>October and November monthly manufacturing wage gains were also upgraded, but these revisions were only about half as great (0.08 percent) as that for December.
>By March, 2010, when manufacturing was in clear expansion mode, those yearly wage gains dropped all the way down to 0.74 percent. It's an open question whether the latest wage increases will last longer.
>At the same time, even some of manufacturing's strong recent wage gains trailed those of the private sector as a whole (whose data were also revised in that benchmark exercise). For example, in January, private sector wages before inflation advanced by 0.47 percent sequentially, though that month's year-on-year improvement of 2.54 percent slightly lagged manufacturing's.
>Longer term, manufacturing's wage-laggard status is even clearer. Since the current economic recovery began, in mid-2009, its pre-inflation wages are up less (11.25 percent) than overall private sector wages (14.68 percent).
>Manufacturing's wages have under-performed after adjusting for inflation as well. The latest Labor Department figures are from December, and showed that in real terms, manufacturing wages were up sequentially by 0.09 percent – the same pace as that of the overall private sector.
>Year-on-year, December real wages were up by 1.90 percent for manufacturing, and by 1.91 percent for the private sector – which also, however, makes clear that manufacturing has been narrowing the gap.
>Since the recovery began in mid-2009, real manufacturing wages are up only 0.09 percent, whereas inflation-adjusted pay in the private sector is up 3.01 percent. But however modest that increase, it means that real manufacturing wages have finally made back all of the losses they experienced during the recovery.
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