Amazon.com Inc., the world's largest Internet retailer, exceeded its second-quarter profit estimates because consumers bought more video-game consoles online and the dollar's decline boosted international sales.
Net income doubled after Chief Executive Officer Jeff Bezos promoted free shipping and lower prices to attract U.S. customers grappling with declining home values and record gasoline prices. Amazon.com's results mimic growth in Web sales at department-store chain J.C. Penney Co. and Gap Inc., suggesting more shoppers are heading online to buy clothing and televisions.
``Amazon's growth is fueled by behavior shifts rather than consumer-spending shifts,'' Scott Tilghman, an analyst at Soleil Securities Corp. in Baltimore, said yesterday in a telephone interview. ``In this economic environment, the fact that they produced that kind of growth is a pretty resounding support of a behavior shift.''
In June 2008, average hourly earnings in manufacturing were $17.73, up 0.4 percent from May’s $17.66 (revised), and up 2.6 percent from $17.28 in June 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.
Manufacturing employment in June, 2008, decreased 33,000 to 13.5 million from May’s (revised) manufacturing employment levels. The decline was registered in both durable and non-durable sub-sectors. Within durable goods, employment continued to decline in industries related to construction, such as Wood Products (-5,600), Fabricated Metals Products (-9,300), Nonmetallic mineral products (-1,200), and Furniture and Related Products (-600). In addition, job losses were reported in Computer and Electronic Products (-1,300), Machinery (-2,300) and Miscellaneous Manufacturing (-2,200). However, employment grew in Transportation Equipment (7,100), largely reflecting the return of workers from strikes and related shutdowns.
In the non-durable goods sector, job losses were registered in Food Manufacturing (-2,700), Beverages and Tobacco Products (-1,100), Textile Mills (-3,200), Plastic and Rubber Products (-1,300), Printing and Related Support Activities (-5,800), and Apparel (-1,300), among others. However, job gains were reported in Petroleum and Coal Products (800), Chemicals (200), and Leather and Allied Products (300). Over the past 12 months, manufacturing has lost 353,000 jobs.
Nonetheless, manufacturing employs 13.5 million workers and represents 9.8 percent of total non-farm employment.
In June 2008, manufacturing output increased 0.2 percent after decreasing by 0.1 percent in May. For the second quarter as a whole, manufacturing output decreased 3.7 percent (annual rate).
The production of durable goods rose 0.7 percent after declining 0.1 percent in May, as revised. Among durable goods industries, increases were reported in several key sector including Motor vehicles and parts (5.4 percent); Primary metals (2.9 percent); Wood products (0.8 percent); Computer and electronic products (1.5 percent); and Aerospace and miscellaneous transportation equipment (1.2 percent). However, the indexes for Non-metallic mineral products (-2.5 percent), Fabricated metal products (-1.6 percent); Machinery (-1.0 percent); Furniture and related products (-0.4 percent); and Miscellaneous manufacturing (-0.8 percent) moved lower.
The output of nondurable goods fell 0.3 percent. Declines in the indexes for Food, beverage, and tobacco products (-0.8 percent); Textiles and product mills (-0.6 percent); Paper (-0.8 percent); Printing and support (-1.9 percent); and Chemicals (-0.2 percent) were only partly offset by higher output of Apparel and leather products, Petroleum and coal products, and Plastics and rubber products.
The index for other manufacturing industries (non-NAICS), which consist of Logging and publishing, rose 0.8 percent.
In June 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 unchanged from their revised capacity utilization in May 2008.
In durable manufacturing, capacity utilization increased 0.3 percentage points in June from May (revised) to 75.5 percent. Capacity utilization edged up in Motor vehicles and parts (3.4 percent); Primary metals (2.3 percent); Wood products (0.6 percent); Computer and electronic products (0.5 percent); and Aerospace and miscellaneous transportation equipment (0.8 percent). Nonetheless, capacity utilization decreased in Nonmetallic mineral products (-2.0 percent); Fabricated metals products (-1.3 percent); Machinery (-0.8 percent); and Miscellaneous manufacturing (-0.7 percent).
In June 2008, capacity utilization in non-durable manufacturing declined 0.3 percentage points from May 2008 (revised) to 80.0 percent. Decreased capacity utilization was reported in Food, beverage and tobacco products (-0.7 percent); Textile and product mills (-0.2 percent); Paper (-0.6 percent); Printing and support (-1.5 percent); and Chemicals (-0.3 percent). These losses outweighed rises in Apparel and leather (1.2 percent); Petroleum and coal products (0.3 percent) and Plastics and rubber products (0.5 percent).
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 May 2008, U.S. manufactured goods exports accounted for 60.8 percent of all U.S. exports of goods and services, compared with 62.8 percent a year ago. During that same period, manufactured goods exports were up 14.5 percent above year ago levels, while imports were up 5.3 percent. The trade deficit in manufactures improved to $444.2 billion (annual rate) for 2008, down from $507.3 billion a year earlier.
Shipments of manufactured durable goods in June 2008, up two of the last three months, increased $1.1 billion or 0.5 percent to $212.2 billion. This followed a 1.2 percent May decrease.
Transportation equipment, up two of the last three months, had the largest increase in value of $0.7 billion or 1.4 percent to $52.6 billion.
The shipments also increased in Primary metals (2.8 percent), Machinery (2.4 percent) and Fabricated metal products (0.6 percent). However, shipments decreased in Computer and electronic products (-3.9 percent), and Electrical equipment, appliances and components (-0.4 percent).
The Producer Price Index (PPI) for finished goods, except foods and energy, moved up 0.2 percent in June 2008, after increasing by the same percent in May. The index for finished energy goods advanced 6.0 percent in June following a 4.9 percent rise in the prior month.
The index for gasoline surged 9.0 percent in June following a 9.3 percent increase in May. The indexes for home heating oil, and liquefied petroleum gas turned up 12.4 percent and 10.2 percent, respectively.
The index for finished consumer goods, except foods and energy, edged up 0.3 percent in June, after rising by the same in May. The index for finished consumer foods rose 1.5 percent in June following 0.8 percent increase in the previous month.
Institute for Supply Management's (ISM) Index (Updated)
In June 2008, the ISM index of manufacturing registered 50.2 percent, an increase of 0.6 percentage point when compared to May’s seasonally adjusted reading of 49.6 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 grew in June following four months of contraction, while the overall economy expanded for the 80th 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 June were: New Orders down 0.1%, Production up 0.3%, Employment down 1.8%, Supplier Deliveries up 1.4%, and Inventories up 3.2%.
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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