Service sector declines less than expected in January:
The nation’s service sector shrank for the fourth straight month in January 2009, but at a slower pace than the previous month, the Institute for Supply Management (ISM), a trade association of purchasing executives, said February 4, 2009. The service sector index which makes up almost 90 percent of the economy, rose to 42.9 last month, from December’s downwardly revised reading of 40.1, the ISM stated. The January reading was above analysts’ expectations of 39, according to a survey by Thomson Reuters.
The ISM group’s index of new orders for non-manufacturing industries rose to 41.6 from 38.9 the prior month. Its gauge of employment decreased to 34.4 from 34.5 in December, and a measure of prices paid climbed to 42.5 from 36.1. The reading above 50 signals growth, while a reading below 50 indicates contraction.
In January 2009, average hourly earnings in manufacturing were $18.01, up 0.3 percent from December 2008’s $17.96 (revised), and up 2.8 percent from $17.52 in January 2008.
(BLS/DOL Employment data from “The Employment Situation: January 2009, USDL 09-0117,” released February 6, 2009; next release is March 6, 2009)
http://www.bls.gov/news.release/pdf/empsit.pdf
The average hourly compensation of all manufacturing workers rose 9.8 percent during the fourth quarter of 2008 (from the previous quarter, at an annual rate), reflecting increases in hourly compensation of 10.1 percent in durable goods subsector and 9.6 percent gain in nondurable goods manufacturing.
When the decrease in consumer prices was taken into account, real hourly compensation in total manufacturing workers advanced 20.9 percent in the fourth quarter, which was the largest increase in the series.
In 2008, hourly compensation of all manufacturing workers grew 3.9 percent, compared to a 3.5 percent increase in 2007. Real hourly compensation in the total manufacturing sector rose 0.1 percent in 2008 after increasing by 0.7 percent in 2007.
(BLS/DOL Productivity data from “Productivity and Costs, USDL 09-0116 February 5, 2009,” released February 5, 2009; next release is March 5, 2009)
http://www.bls.gov/news.release/pdf/prod2.pdf
In the third quarter of 2008, manufacturing profits rose 26.8 percent, or $57.7 billion (at an annual rate), to $272.6 billion from $214.9 billion in the second quarter. Compared with third quarter profits of 2007, manufacturing profits were down $34 billion in the third quarter of 2008. Manufacturing profits in 2007 were $12.3 billion above manufacturing profits in 2006.
Third quarter 2008 profits estimates for all non-financial industries (manufacturing being a subcategory) advanced 9.1 percent from the second quarter of 2008 to $915.6 billion.
In January 2009, manufacturing employment fell by 207,000 to 12.7 million from December’s (revised) manufacturing employment levels, the largest over-the-month decline since October 1982.
In January, durable goods manufacturing lost 157,000 jobs, with notable decreases in Fabricated metal products (-36,700), Motor vehicles and parts (-31,300), Machinery (-21,800), Furniture and related products (-11,400), Primary metals (-8,500), Wood products (-13,600), and Computer and electronic products (-8,800).
In the nondurable goods component, the job losses occurred in Plastics and rubber products (-14,500), Food manufacturing (-5,700), Textile mills (-3,100), Printing and related support activities (-7,700), and Paper and paper products (-6,000), among others.
The manufacturing employment of 12.7 million workers represents 9.4 percent of total non-farm employment.
(BLS/DOL Employment data from “The Employment Situation: January 2009, USDL 09-0117,” released February 6, 2009; next release is March 6, 2009)
http://www.bls.gov/news.release/pdf/empsit.pdf
In December 2009, manufacturing output fell 2.3 percent, a 9.9 percent decline from the level a year ago.
The index for durable goods industries decreased 2.6 percent in December with declines widespread among its components. Only the index for Aerospace and miscellaneous transportation equipment moved up (9.6 percent). The jump in this index reflected the further recovery of output from the strike in commercial aircraft.
The production of nondurable goods moved down 2.1 percent in December after a loss of 2.2 percent in November. The declines were recorded in all the major nondurable goods indexes. The largest decline was seen in Textile and product mills which fell 3.4 percent. Other industries with declines of at least 2 percent included Food, beverage, and tobacco products (-2.0 percent), Plastics and rubber products (-2.7 percent), Paper (-2.1 percent), Chemicals (-2.6 percent) and Printing and support (-2.8 percent).
The index for other manufacturing industries (non-NAICS), which consist of publishing and logging, decreased 2.1 percent in December.
In December 2008, manufacturing industries (NAICS based) operated at 70.1 percent of capacity, 9.4 percentage points below their 1972-2007 average of 79.5 percent and 1.7 percentage points lower than their revised capacity utilization in November 2008.
In durable manufacturing, capacity utilization decreased 1.9 percentage points in December from November (revised) to 65.9 percent. Capacity utilization declined in Nonmetallic mineral products (-0.7 percent); Primary metals (-6.0 percent); Wood products (-2.9 percent); Motor vehicles and parts (-4.1 percent); Electrical equipment, appliances, and components (-2.7 percent); Furniture and related products (-1.7 percent); Machinery (-2.1 percent); Computer and electronic products (-2.4 percent), among others. Capacity utilization increased in Aerospace and miscellaneous transportation equipment (6.6 percent).
Capacity utilization in non-durable manufacturing in December moved down 1.6 percentage points from November 2008 (revised) to 74.7 percent. Decreased capacity utilization was registered in Food, beverage, and tobacco products (-1.6 percent), Chemical (-1.9 percent); Plastics and rubber products (-2.1 percent); Printing and support (-2.0 percent), Paper (-1.6 percent); and Textile and product mills (-1.9 percent).
Manufacturing productivity decreased 3.0 percent (seasonally adjusted annual rate) in the fourth quarter of 2008, as output dropped 16.7 percent and hours of all persons declined 14.1 percent. The decreases in hours and output were the largest for these series, since the second quarter of 1987. Manufacturing productivity had grown at a 3.7 percent average annual rate from 2000 to 2007 and 1.3 percent increase in 2008.
In the durable goods manufacturing sector, productivity dropped 13.4 percent in the fourth quarter of 2008, as output fell 26.1 percent and hours declined 14.7 percent. These were the largest decreases in productivity, output, and hours for the entire series dating back to second-quarter 1987.
In the nondurable goods sector, productivity rose 7.6 percent in the fourth quarter as hours fell faster than output; output declined 6.5 percent and hours dropped 13.1 percent.
The trend of strong productivity growth has resulted in the decline in manufacturing employment.
(BLS/DOL Productivity data from “Productivity and Costs, USDL 09-0116 February 5, 2009,” released February 5, 2009; next release is March 5, 2009)
http://www.bls.gov/news.release/pdf/prod2.pdf
Year to date November 2008, U.S. manufactured goods exports accounted for 61.0 percent of all U.S. exports of goods and services, compared with 62.3 percent a year ago. During that same period, manufactured goods exports were up 11.7 percent above year ago levels, while imports were up 2.8 percent. The trade deficit in manufactures improved to $462.8 billion (annual basis) for 2008, down from $537.7 billion a year ago.
In December 2008, shipments of manufactured durable goods decreased $1.4 billion or 0.7 percent to $191.3 billion, down five consecutive months. This followed a 4.2 percent November decline.
Primary metals had the largest decrease, down $1.3 billion or 7.4 percent, to $16.7 billion. Shipments also decreased in Fabricated metal products (-3.3 percent); and Computer and electronic products (-0.1 percent). Shipments increased in Machinery (2.5 percent); Electrical equipment, appliances and components (1.5 percent); and Transportation equipment (1.3 percent).
In December 2008, the Producer Price Index (PPI) for finished goods, except foods and energy, increased 0.2 percent, after edging up 0.1 percent in November.
The index for finished energy goods fell 9.3 percent in December after decreasing 11.2 percent in November. Prices for liquefied petroleum gas moved down 21.8 percent in December following a 33.4 percent drop a month earlier. The index for residential natural gas also declined less than it had in November. Gasoline prices decreased 25.7 percent for the second consecutive month.
By contrast, prices for residential electric power increased 0.3 percent compared with a 1.4 percent advance in November, partially offsetting the declines in petroleum and natural gas-based finished energy goods.
Institute for Supply Management's (ISM) Index updated
In January 2009, the ISM index (PMI) of manufacturing registered 35.6 percent, 2.7 percentage points higher than the seasonally adjusted 32.9 percent reported in December.
While this is a significant month-over-month improvement, it is still a sign of continuing weakness in the sector. An index above 50 percent indicates that the manufacturing economy is generally expanding; an index below 50 percent indicates that it is generally contracting.
Economic activity in the manufacturing sector failed to grow in January for the twelfth consecutive month, and the overall economy contracted for the fourth consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business®.
“January marked 12 months of contraction in the manufacturing sector. However, the rate of decline as measured by the PMI was slower than experienced in December. The January New Orders Index is at 33.2 percent, up from the seasonally adjusted 23.1 percent recorded in December,” says Norbert J. Ore, C.P.M., chair of the manufacturing business survey committee.
The changes in the components of the PMI in January were: New Orders up 10.1 percent, Production up 5.8 percent, Employment unchanged, Supplier Deliveries down 0.4 percent, and Inventories down 2.1 percent.
Prepared by
Office of Competition and Economic Analysis
Manufacturing and Services
International Trade Administration
U.S. Department of Commerce
(202) 482-3699
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