Total sales at U.S. retailers rose a full percentage point in May 2008, an increase that was twice as much as expected by Wall Street economists, as many consumers had more spending cash in their wallets from government rebate checks, the Commerce Department reported. Taking out the higher prices consumers paid for gasoline, sales still rose by a strong 0.8 percent, the biggest increase in a year.
Economists were expecting to see a boost in spending during the month because a large portion of government rebate checks, which are a key part of the president's economic stimulus package, have been distributed. Excluding autos, sales rose 1.2 percent, the biggest rise in six months and well beyond the 0.7 percent rise economists were expecting.
In May 2008, average hourly earnings in manufacturing were $17.63, up 0.1 percent from April’s $17.61 (revised), and up 2.3 percent from $17.23 in May 2007.
The average hourly compensation of all manufacturing workers grew 7.9 Percent (from previous quarter, at annual rate) in the first quarter of 2008, reflecting increases in hourly compensation of 7.5 percent in durable goods industries and 8.5 percent in the nondurable goods sector.
For the first quarter of 2008, real hourly compensation, which takes into account of changes in consumer prices, rose 3.5 percent in total manufacturing workers after increasing 2.7 percent in the previous quarter. Manufacturing real hourly compensation rose 3.1 percent in durable goods industries and grew 4.0 percent in non-durables.
In 2007, hourly compensation of all manufacturing workers increased 5.6 percent, compared to a 2.8 percent rise in 2006. Real hourly compensation in total manufacturing sector increased 2.7 percent in 2007 after decreasing 0.5 percent in 2006.
Manufacturing profits in the fourth quarter of 2007 were $280.3 billion, down 5.6 percent or $16.5 billion (at an annual rate) from $296.8 billion in the third quarter.
Manufacturing profits in the fourth quarter of 2007 were up $0.1 billion compared with the fourth quarter profits of 2006. Manufacturing profits in 2007 were up $12.3 billion above manufacturing profits in 2006.
First quarter 2008 profit estimates for all non-financial industries (manufacturing being a subcategory) were down 15 percent from the fourth quarter of 2007 to $827.5 billion, and below 16 percent from the first quarter of 2007.
In May 2008, manufacturing employment fell 26,000 to 13.6 million from April’s (revised) manufacturing employment levels. The decline was reported in both durable and non-durable goods industries. Within durable goods, employment continued to decline in industries related to construction, such as Wood Products (-8,400), Furniture and Related Products (-2,900), and Nonmetallic mineral products (-4,700). In addition, job losses were registered in Computer and Electronic Products (-7,500), Machinery (-1,200) and Miscellaneous Manufacturing (-1,800). However, employment increased in Transportation Equipment (7,200), and Fabricated Metals Products (800).
In the non-durable goods sector, job losses were registered in Food Manufacturing (-1,700), Textile Mills (-1,100), Apparel (-2,200), and Printing and Related Support Activities (-2,300), among others. However, job gains were reported in Chemicals (900), and Paper and Paper Products (500).
Thus far in 2008, monthly job losses in manufacturing have averaged 41,000 compared with 22,000 a month in 2007 and 14,000 a month in 2006. Nonetheless, manufacturing employs 13.6 million workers and represents 9.9 percent of total non-farm employment.
In April 2008, manufacturing output declined 0.8 percent after edging up by 0.1 percent in March. Half of this loss was attributable to a drop of 8.2 percent in the production of motor vehicles and parts.
The production of durable goods fell 1.4 percent after having been unchanged in March, as revised. In addition to the motor vehicles and parts, the durable manufacturing industries that registered decreases in output of more than 1 percent in April included nonmetallic mineral products (-2.4%), fabricated metal products (-1.5%), and machinery (-1.7%). In contrast, the output of computer and electronic products moved up (1.1%), more than 1 percent increase for the third consecutive month.
The index for nondurable manufacturing edged down 0.1 percent; sizable reductions occurred in the indexes for textile and product mills (-1.8%), printing and support (-1.2%), and plastics and rubber products (-0.8%). The output of petroleum and coal products rose (0.8%). The production of non-NAICS manufacturing (logging and publishing) fell 1.8 percent.
In April 2008, manufacturing industries (NAICS based) operated at 77.6 percent of capacity, 1.9 percentage points below their 1972-2007 average of 79.5 percent and 0.7 percentage points less than their revised capacity utilization in March 2008.
In durable manufacturing, capacity utilization decreased 1.2 percentage points in April from March (revised) to 75.4 percent. Capacity utilization edged down in Motor vehicles and parts (-5.5%); Nonmetallic mineral products (-1.9 percent); Fabricated metals products (-1.2 percent); Machinery (-1.3 percent); and Electrical equipment, appliances and components (-0.8%) among others. Nonetheless, capacity utilization increased in Computer and electronic products (0.1 percent); and Aerospace and miscellaneous transportation equipment (0.1 percent).
In April 2008, capacity utilization in non-durable manufacturing fell 0.1 percentage points from March 2008 (revised) to 80.1 percent. Decreased capacity utilization was reported in Food, beverage and tobacco products (-0.1%); Textile and product mills (-1.0%); Paper (-0.3%); Printing and support (-1.0%); Plastics and rubber products (-0.8%); and Chemicals (-0.1%). These losses outweighed rises in Apparel and leather (0.3%) and Petroleum and coal products (0.7%).
Manufacturing productivity grew at a seasonally adjusted annual rate of 3.6 percent in the first quarter of 2008, reflecting a 1.2 percent decrease in output and a 4.7 percent decrease in hours. This was the largest decline in hours since a 6.3 percent drop in the third quarter of 2003.
In durable goods industries, productivity increased at a seasonally adjusted annual rate of 2.6 percent in the first quarter of 2008, as output and hours decreased by 0.9 percent and 3.4 percent, respectively. In nondurable goods industries, output per hour rose 5.7 percent, the highest rate in three years, reflecting decreases of 1.6 percent in output and 6.9 percent in hours.
Total manufacturing productivity grew 4.0 percent (seasonally adjusted annual rate) from the first quarter of 2007 to the first quarter of 2008.
Strong productivity growth has resulted in the decline in manufacturing employment.
Year to date April 2008, U.S. manufactured goods exports accounted for 60.4 percent of all U.S. exports of goods and services, compared with 62.2 percent a year ago. During that same period, manufactured goods exports were up 14.7 percent above year ago levels, while imports were up 5.6 percent. The trade deficit in manufactures improved to $444.9 billion (annual rate) for 2008, down from $504.5 billion a year earlier.
Shipments of manufactured durable goods in April 2008 increased $2.5 billion or 1.2 percent to $212.2 billion. This followed two consecutive monthly decreases, including a 0.9 percent March decrease.
Computers and electronic products had the largest increase, up $1.4 billion or 4.3 percent to $32.8 billion. The next largest percentage increases were in Primary metals (2.4 percent), Fabricated metal products (1.2 percent), Transportation equipment (0.8 percent), and Electrical equipment, appliances and components (0.5 percent). However, shipments decreased in Machinery (-1.3 percent).
In April 2008, the Producer Price Index (PPI) for finished goods, except foods and energy, moved up 0.4 percent following a 0.2 percent increase in the previous month. The index for finished energy goods fell 0.2 percent in April after rising 2.9 percent in March.
Not all prices for finished goods, except foods and energy increased. Prices for communication and related equipment declined 0.4 percent after rising by the same rate in the prior month.
Prices for residential natural gas advanced 5.4 percent in April, compared with a 4.2 percent gain a month earlier. Prices for liquefied petroleum gas turned up 3.5 percent in April, following a 4.2 percent rise in March.
Finally, the index for finished consumer goods, except foods and energy, increased 0.4 percent in April, after climbing 0.3 percent in the previous month.
Institute for Supply Management's (ISM) Index (updated)
In May 2008, the ISM index of manufacturing registered 49.6 percent, an increase of 1.0 percent when compared to April’s seasonally adjusted reading of 48.6 percent. An index above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.
Economic activity in the manufacturing sector failed to grow in May as the ISM index fell below 50 percent for the fourth consecutive month, while the overall economy grew for the 79th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business®.
The changes in the components of the ISM index in May were: New Orders up 3.2%, Production up 2.1%, Employment up 0.1%, Supplier Deliveries down 0.3%, and Inventories down 0.1%.
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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