Income Jump Largest in a Year; Savings at 15-Year High
U.S. consumer spending rose last month for the first time since February as government stimulus pushed incomes sharply higher, the Commerce Department said on Friday, supporting the view the economy was close to pulling out of recession. Consumer spending, which accounts for over 70 percent of U.S. economic activity, rose 0.3 percent in May after an upwardly revised flat reading in April, the department said. Personal income surged 1.4 percent last month from April as social benefit payments unleashed by the government's massive economic stimulus jumped. April's income gain was revised upward to 0.7 percent from a previously reported gain of 0.5 percent. Savings jumped to a record annual rate of $768.8 billion, the highest level since records began in 1959. The saving rate climbed to 6.9 percent, the highest since December 1993.
Confidence among U.S. consumers rose this month for a fourth straight time, reflecting signs that the worst of the recession has passed. The Reuters/University of Michigan final index of consumer sentiment gained to 70.8, the highest level since February 2008, from 68.7 in May. Today’s measure compares with a preliminary June reading of 69. Recent reports show some areas of the economy, such as housing and manufacturing, are seeing a smaller pace of decline, consistent with the Federal Reserve’s projection this week that the slump is “slowing.” Government data today indicated that efforts to revive the economy are allowing consumers to spend even with unemployment at a 25-year high. The data also showed savings surged to the highest level since 1993.
In May 2009, average hourly earnings in manufacturing were $18.08, down 0.39 percent from April 2009’s $18.15 (preliminary), and up 2.44 percent from May 2008’s $17.65.
Hourly compensation in manufacturing grew 13.4 percent during the first quarter of 2009, reflecting a 15.8 percent rise in durable goods industries and a 10.1 percent rise in the nondurable goods industries (seasonally-adjusted annual rates).
Real hourly compensation, which takes into account changes in consumer prices, increased 16.1 percent for all manufacturing workers.
In 2009, hourly compensation of all manufacturing workers grew 8.4 percent, compared to a 4.1 percent increase in 2008. Real hourly compensation in the total manufacturing sector rose 8.7 percent in 2009 after increasing by 0.3 percent in 2008.
(BLS/DOL Productivity data from “Productivity and Costs, USDL 09-0587 First Quarter, Revised,” released June 4, 2009; next release is August 11, 2009)
http://www.bls.gov/news.release/pdf/prod2.pdf
In the first quarter of 2009, manufacturing profits decreased 7.0 percent, or $16.2 billion (at an annual rate), to $215.0 billion from $231.2 billion in the fourth quarter. Compared with first quarter profits of 2008, manufacturing profits were down $25.5 billion in the first quarter of 2009.
First quarter 2009 profits estimates for all non-financial industries (manufacturing being a subcategory) increased 0.2 percent from the fourth quarter of 2008 to $827.4 billion.
In May 2009, manufacturing employment fell by 156,000 to 12.0 million from April’s (preliminary) manufacturing employment levels.
In May, durable goods manufacturing lost 131,000 jobs, with decreases in all categories: Transportation Equipment (-35,900) of which Motor vehicles and parts was -29,800, Machinery (-26,400), Fabricated metal products (-18,700), Computer and electronic products (-14,400), Primary metals (-9,800), Furniture and related products (-6,700), Wood products (-6,600), Nonmetallic mineral products (-6,200), Electronical equipment and Appliances (-6,000), and Miscellaneous manufacturing (-1,000).
In May, nondurable goods manufacturing lost 25,000 jobs. Job losses occurred in Plastics and rubber products (-9,800), Paper and paper products (-5,100), Printing and related support activities (-3,600), Chemicals (-2,600), Food manufacturing (-1,500), Beverages and tobacco products (-800), Textile mills (-800), Petroleum and coal products (-600), Leather and allied products (-200), and Textile product mills (-100). However, Apparel reported a gain of 200 jobs.
The manufacturing employment of 12.0 million workers represents 9.1 percent of total non-farm employment.
In May 2009, manufacturing output fell 1.0 percent and was 15.3 percent below its year-earlier level.
The production index for durable goods declined 1.8 percent. The durable manufacturing industries that registered decreases in output of more than 1 percent included
Motor vehicles and parts (-7.9%), Machinery (-3.4%), Fabricated metal products (-1.9%), Nonmetallic mineral products (-1.7%), Electrical equipment, appliances, and components (1.5%), Wood products (-1.2%), and Computer and electronic products (-1.1%). However, increased production was registered in Primary metal (0.8%), and Aerospace and miscellaneous transportation equipment (0.4%).
The production of nondurable goods decreased 0.2 percent. Industries that registered notable decreases in output of more than 1 percent included Petroleum and coal products (-3.5%), Textile and products mills (-1.3%), and Paper (-1.2%). However, increased production was registered in Food, beverage, and tobacco products (0.7 %), Chemical (0.3%), and Apparel and leather (0.1%).
The index for other manufacturing industries (non-NAICS) decreased 0.6 percent in May.
In May 2009, manufacturing industries (NAICS based) operated at 65.1 percent of capacity, 14.3 percentage points below their 1972-2008 average of 79.4 percent and 0.6 percentage points lower than their revised capacity utilization in April 2009.
In durable manufacturing, capacity utilization decreased 1.1 percentage points in May from April (revised) to 58.3 percent. This reflects declines of more than 1.0 percent in capacity utilization in Motor vehicles and parts (-3.1 percent), Machinery (-2.0 percent), Computer and electronic products (-1.1 percent), Fabricated metal products (-1.1 percent), and Electrical equip., appliances and components (-1.0 percent). Increase capacity utilization was registered in Primary metal (0.4 percent), Aerospace and miscellaneous transportation equipment (0.2 percent), Furniture and related products (0.2 percent), and Miscellaneous (0.1 percent).
Capacity utilization in non-durable manufacturing in May decreased 0.1 percentage point from April (revised) to 72.5 percent. Decreased capacity utilization was registered in Petroleum and coal products (-2.9 percent), Paper (-0.7 percent), Textile and product mills (-0.5 percent), Plastics and rubber products (-0.3 percent). Increased capacity utilization was registered in Food, beverage, and tobacco products (0.5 percent), Apparel and leather (0.3 percent), and Chemical (0.3 percent).
Productivity decreased at a 2.7 percent annual rate in the manufacturing sector during the first quarter of 2009, reflecting a 21.7 percent decrease in output and a 19.5 percent decrease in hours. These were the largest-ever declines in the output and hours series, which begin with data for the second quarter of 1987. Over the last four quarters, manufacturing productivity fell 3.2 percent, the largest four-quarter decline in the series. This contrasts with the 3.7 percent average annual increase from 2000 to 2007.
In the durable goods manufacturing subsector, output declined 31.0 percent and hours fell 23.0 percent, yielding a productivity decline of 10.4 percent.
In nondurable goods industries, productivity rose 1.9 percent as the decline in output of 11.6 percent was less than the 13.2 percent decline in hours.
(BLS/DOL Productivity data from “Productivity and Costs, USDL 09-0587 First Quarter 2009, Revised,” released June 4, 2009; next release is August 11, 2009)
http://www.bls.gov/news.release/pdf/prod2.pdf
Year to date April 2009, U.S. manufactured goods exports accounted for 82.2 percent of all U.S. exports of goods, compared with 81.1 percent a year ago. Manufactured goods exports in April were 8.2 percent lower than previous month, while imports were down 2.9 percent. Year to date April 2009’s trade deficit in manufactured goods of 95.2 billion was less compared with $146.5 billion a year ago.
In May 2009, shipments of manufactured durable goods decreased $3.6 billion or 2.1 percent to $169.9 billion, down ten consecutive months. This followed a 0.5 percent April decline. Transportation equipment had the largest decrease, $2.7 billion or -6.0 percent, to $42.2 billion. Shipments also decreased in Primary metals (-3.1 percent), Electrical equipment, appliances and components (-3.0 percent), Fabricated metal products (-1.6 percent), and Computers and electronic products (-0.7 percent). However, shipments increased in Machinery (1.9 percent) after being down for four consecutive months.
In May 2009, the Producer Price Index (PPI) for finished goods, except foods and energy, decreased by 0.1.
The index for finished energy goods was up 2.9 percent in May. The index for Gasoline price increased 13.9 percent, liquefied petroleum gas 8.6 percent, Home heating oil and distillates 0.6 percent, and No. 2 diesel fuel 4.5 percent. The index for Residential gas declined 4.7 percent in May after declining 6.2 percent in April. The index for residential electric power also declined 0.3 in May.
Economic activity in the manufacturing sector failed to grow in May for the 16th consecutive month, while the overall economy grew for the first time following seven months of decline, say the nation's supply executives in the latest Manufacturing ISM Report On Business®.
In May 2009, the ISM index (PMI) of manufacturing registered 42.8 percent, 2.7 percentage points higher than the seasonally adjusted 40.1 percent reported in April.
While this is a 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.
The percentage-point changes in the components of the PMI in May were: New Orders up 3.9 percent to 51.1, Production up 5.6 percent to 46.0, Employment down -0.1 to 34.3, Supplier Deliveries up 4.9 percent to 49.8, and Inventories down 0.7 to 32.9.
Prepared by
Office of Trade Industry Information
Manufacturing and Services
International Trade Administration
U.S. Department of Commerce
(202) 482-2460-4691
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