Although the American economy created a surprisingly strong 271,000 net new jobs on month in October, manufacturing generated no gain during this period. Largely as a result, the sector's absolute employment levels are now lower than in January, a 10-month stretch that qualifies as a recession, and that no doubt stems from the production recession in which industry is also mired. Moreover, manufacturing's share of total non-farm employment hit a new all-time low of 8.63 percent. Industry's annual 80,000 October jobs advance was the lowest such improvement since September, 2013, and wage increases in the sector resumed trailing those of the private sector overall.
Here’s my analysis of the latest monthly (October) manufacturing figures contained in this morning’s employment report from the Bureau of Labor Statistics:
>Although the entire non-farm U.S. economy in October posted its best monthly jobs gain since May, manufacturing's failure to add any positions at all pushed the sector into its first jobs recession since the sector hit its last absolute employment bottom – in February and March of 2010. Not coincidentally, according to the Federal Reserve's industrial production index, manufacturing is mired in an output recession as well.
>Total manufacturing employment of 12.317 million is 1,000 below its level in January, 10 months ago. The sector has not experienced such a long stretch of weak job-creation since it was recovering from the Great Recession.
>The October figures, which are still preliminary, also pushed manufacturing's share of total non-farm employment (the Labor Department's jobs universe) down to 8.63 percent – a new record low. At that early 2010 two-month absolute manufacturing jobs bottom, the sector accounted for 10.69 percent and 10.67 percent of all non-farm employment.
>Manufacturing's year-on-year employment performance in October was historically bad as well. At 80,000, it was the lowest such total since September, 2013's 74,000. From October, 2013 and October, 2014, manufacturing created 197,000 net new positions, and between the previous two Octobers, its employment rose by 89,000.
>The new jobs report also revealed slightly downward manufacturing revisions for August and September. August's 18,000 employment decline – the worst monthly drop since July, 2013's 22,000 – is now judged to be a 19,000 net loss. September's 9,000 employment decline was unchanged.
>Since manufacturing hit its 2010 employment bottom, the sector has regained 864,000 (37.68 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 13.493 million.
>In fact, whereas total private sector employment is now 4.05 percent higher than at the recession's beginning, manufacturing employment is still 10.40 percent lower.
>In addition, October's (still preliminary) figures returned manufacturing to its consistent recovery-era position as an American wage laggard.
>In the September jobs report, manufacturing's pre-inflation wages were reported as up a penny over August's levels, whereas wages for the entire private sector were reported as down a penny. The revised September data issued today (which is still preliminary) now reports that manufacturing wages rose by two cents on month, and private sector wages increased by a penny.
>In October, however, the private sector's monthly wage increase of 0.36 percent dwarfed manufacturing's 0.08 percent rise. Year-on-year, manufacturing's 2.05 percent wage improvement also trailed the private sector's 2.48 percent – the fastest advance during the current recovery. But manufacturing's latest annual wage increase was industry's best such performance since January, 2014's 2.58 percent. And it exceeded the 1.76 percent rise between the previous two Octobers.
>Longer term, manufacturing's remained a national wage laggard as well. Since the current economic recovery began, its pre-inflation wages are up less (10.51 percent) than overall private sector wages (13.72 percent).
>Manufacturing's wage performance has been more mixed after adjusting for inflation, depending on the time frame examined. The latest Labor Department figures are from September (preliminary as well), and the October numbers will come out later this month. But they showed that in real terms, manufacturing wages rose sequentially by 0.19 percent in September, nearly twice as fast as the 0.10 percent gain for the overall private sector.
>Year-on-year, however, the 2.29 percent increase in inflation-adjusted September manufacturing wages was somewhat lower than the private sector's 2.32 percent.
>And since the recovery began in mid-2009, real manufacturing wages are still down 0.19 percent. Their private sector counterparts are up 2.42 percent.
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