In May 2008, U.S. consumer spending rose more than anticipated as tax rebates pushed the biggest gain in incomes in almost three years, enabling households to at least temporarily overcome soaring fuel prices. The 0.8 percent rise in purchases was the biggest since November 2007, as Americans bought electronics, furniture, clothes, the Commerce Department reported today.
Incomes grew 1.9 percent, the most since September 2005, and measures of inflation were lower than expected. The figures indicate that the fiscal stimulus will cause a pickup in economic growth this quarter after an expansion of 1 percent in the first three months of the year.
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 first quarter of 2008 were $224.3 billion, down 20.0 percent or $56 billion (at an annual rate) from $280.3 billion in the fourth quarter.
Compared with the first quarter profits of 2007, manufacturing profits were down $74.6 billion in the first quarter of 2008. Manufacturing profits in 2007 were up $12.3 billion above manufacturing profits in 2006.
First quarter 2008 profits for all non-financial industries (manufacturing being a subcategory) were down 15 percent from the fourth quarter of 2007 to $827.7 billion, and below 15.9 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 May 2008, manufacturing output was unchanged after declining by 0.9 percent in April.
The production indexes for both durable and nondurable manufacturing industries were also unchanged. Among durable goods industries, increases were reported in several key sector including Electrical equipment, appliances and components (1.2%); Motor vehicles and parts (1.0%); Computer and electronic products (0.5%); Fabricated metal products (0.3%); and Miscellaneous manufacturing (1.1%). Decreases were recorded in the indexes for Wood products (-2.2%); Nonmetallic mineral products (-0.5%); Machinery (-1.5%); Aerospace and miscellaneous transportation equipment (-0.7%), and Furniture (-0.4%). Among nondurable manufacturing industries, reductions occurred in the indexes for Food (-0.2); Apparel and leather (-0.9%); Paper (-0.5%); and Petroleum and coal products (-0.4%). The production declines in these industries were offset by higher output for Textile and product mills (0.2%); Chemicals (0.6%); and Plastics and rubber products (0.3%). The production of non-NAICS manufacturing (logging and publishing) fell for a second consecutive month and has fallen 4.7 percent over the past 12 months.
In May 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 0.1 percentage points less than their revised capacity utilization in April 2008.
In durable manufacturing, capacity utilization decreased 0.2 percentage points in May from April (revised) to 75.2 percent. Capacity utilization moved up in Electrical equipment, appliances and components (0.8%); Motor vehicles and parts (0.6%); Fabricated metals products (0.2%); and Miscellaneous manufacturing (0.6%). Nonetheless, capacity utilization decreased in Wood products (-1.4%); Machinery (-1.2%); Aerospace and miscellaneous transportation equipment (-0.7%); and Nonmetallic mineral products (-0.4%), among others.
In May 2008, capacity utilization in non-durable manufacturing was unchanged from April 2008 (revised) to 80.3 percent. Decreased capacity utilization was reported in Food, beverage and tobacco products (-0.2%); Apparel and leather (-0.5%); Paper (-0.4%); Printing and support (-1.0%); and Petroleum and coal products (-0.4%). These losses were offset by higher output for Textile and product mills (0.3%); Chemicals (0.4%); and Plastics and rubber products (0.1%).
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 May 2008 decreased $2.3 billion or 1.1 percent to $211.3 billion. This followed a 1.8 percent April increase.
Transportation equipment had the largest decrease, down $2.0 billion or 3.7 percent to $51.9 billion. The next largest percentage decrease was in Computers and electronic products (-2.2 percent). However, shipments increased in Primary metals (1.1 percent), Machinery (0.5 percent) and Electrical equipment, appliances and components (0.6 percent).
In May 2008, the Producer Price Index (PPI) for finished goods, except foods and energy, turned up 0.2 percent after moving up 0.4 percent in April. The index for finished energy goods increased 4.9 percent in May following a 0.2 percent decrease in the previous month. Conversely, partially offsetting the upturn in finished energy goods prices, the advance in the index for residential electric power slowed to 0.6 percent in May from 1.2 percent a month earlier. Prices for residential natural gas rose 3.8 percent in May from 5.4 percent in the prior month.
The index for gasoline rose 9.3 percent in May following a 4.6 percent decrease in April. The indexes for home heating oil, and liquefied petroleum gas increased 8.0 percent and 5.7 percent, respectively.
The index for finished consumer goods, except foods and energy, increased 0.3 percent in May, after rising 0.4 percent in the preceding month. The index for finished consumer foods rose 0.8 percent in May following no change in the previous month.
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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