Manufacturers added 17,000 net new workers in December, extending the increase of 29,000 in November, according to the Bureau of Labor Statistics. This continues to suggest that manufacturers are increasing their workforces at a decent rate, consistent with recent gains in demand and output.
However, manufacturers still face a number of challenges, ranging from slowing global growth to a still-cautious consumer to the prospect of increased interest rates. With the start of the 114th Congress, manufacturers are optimistic that there will be positive developments on various critical pro-growth measures, including comprehensive tax reform, trade promotion authority and a long-term reauthorization of the Export-Import Bank, and focusing on important infrastructure priorities like building the Keystone XL pipeline and addressing the solvency of the Highway Trust Fund.
In 2014, the manufacturers hired an additional 15,500 workers per month on average, more than doubling the pace of 7,000 per month seen in 2013. Since the end of 2009, the sector has created 762,000 workers on net, with 12.2 million workers in December.
Durable and nondurable goods employment rose 13,000 and 4,000, respectively. Sectors with the largest monthly increases included fabricated metal products (up 4,600), nonmetallic mineral products (up 2,600), primary metals (up 2,600), food manufacturing (up 2,200), transportation equipment (up 2,100), chemicals (up 1,900) and petroleum and coal products (up 1,700). In contrast, electrical equipment and appliances (down 1,200), wood products (down 900), apparel (down 800) and printing and related support activities (down 700) were among those areas with lower employment levels in December.
Looking at 2014 as a whole, the following manufacturing sectors experienced the greatest job growth: transportation equipment (up 56,300), machinery (up 34,400), fabricated metal products (up 28,000), nonmetallic mineral products (up 19,600), furniture and related products (up 15,600) and chemicals (up 15,300).
Despite the increased employment data, average earnings edged slightly lower. Average weekly earnings for manufacturing employees declined from $1,025.86 in November to $1,021.31 in December. On a year-over-year basis, average weekly earnings have increased by 1.5 percent. At the same time, the average number of hours worked in the sector decreased from 41.1 hours to 41.0 hours; however, average overtime hours rose from 3.5 hours to 3.6 hours.
Meanwhile, nonfarm payroll employment increased by 252,000 in December, slightly higher than the consensus estimate of around 245,000 expected. In addition, the October and November data were both revised higher, adding another 50,000 workers to prior estimates. Overall, the U.S. economy generated 246,000 additional nonfarm payroll employees each month in 2014, a marked improvement from the 194,000 monthly average observed in 2013. This suggests that hiring in the labor market has begun to move in the right direction.
Along those lines, the unemployment rate dropped from 5.8 percent to 5.6 percent, its lowest level since June 2008. This corresponded with a decrease in the participation rate from 62.9 percent to 62.7 percent, matching the rate seen in September. As such, the participation rate remains near 30-year lows.
Moving forward, manufacturers continue to be mostly upbeat about orders, production and hiring for 2015.
Chad Moutray is the chief economist, National Association of Manufacturers.