Wal-Mart Stores Inc. and Costco Wholesale Corp. said July sales rose as higher food and fuel costs encouraged shoppers to buy back-to-school items at discounted prices.
Wal-Mart, the world’s largest retailer, said on August 7, 2008, that July sales at stores open at least a year, rose 3 per cent while Costco, the largest U.S. warehouse-club chain, reported a 10 per cent increase in sales.
Consumers received about $100 billion in rebate checks between April and mid-July as part of the Bush administration’s economic stimulus package from earlier this year.
“With the end of the stimulus checks, we know consumers are spending more cautiously, and we continue to see a pronounced paycheck cycle at the end of the month,” said Eduardo Castro-Wright, head of Wal-Mart’s US business. Wal-Mart warned of weaker times ahead as the flow of rebate checks ends.
In July 2008, average hourly earnings in manufacturing were $17.78, up 0.3 percent from June’s $17.72 (revised), and up 2.8 percent from $17.30 in July 2007.
In the second quarter of 2008, the average hourly compensation of all manufacturing workers rose 4.6 Percent (from the previous quarter, at an annual rate) reflecting increases in hourly compensation of 5.0 percent in durable goods manufacturing and 3.8 percent in the nondurable goods manufacturing.
For the second quarter of 2008, real hourly compensation, which takes into account of changes in consumer prices, fell 0.6 percent in total manufacturing workers after increasing 1.8 percent in the first quarter; was unchanged in durable goods industries, and declined 1.2 percent in non-durables.
In 2007, hourly compensation of all manufacturing workers grew 3.5 percent, compared to a 4.1 percent increase in 2006. Real hourly compensation in total manufacturing sector rose 0.7 percent in 2007 after increasing by 0.8 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 July 2008, manufacturing employment decreased 35,000 to 13.5 million from June’s (revised) manufacturing employment levels. The decline was registered in both, durable and non-durable sub-sectors.
Among durable goods, job losses were widespread with notable declines in Transportation equipment (-8,300), Wood products (-3,900), Nonmetallic mineral products (-2,100), Furniture and related products (-2,300), Computer and electronic products (-2,500), and Miscellaneous manufacturing (-2,100). Machinery added 6,100 jobs over the month.
For non-durable goods, job losses registered in Food manufacturing (-4,200), Printing and support (3,200), Plastics and rubber products (-2,900), Chemicals (-2,100), and Textile mills (-2,600), among others. Over the past 12 months, manufacturing employment has declined by 383,000.
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 decreased 1.4 percent (seasonally adjusted annual rate) in the second quarter of 2008, as output fell 3.5 percent and hours of all workers declined 2.0 percent.
In durable goods industries, productivity fell at a seasonally adjusted annual rate of 3.5 percent in the second quarter of 2008, the largest drop since fourth quarter of 1990, as output and hours decreased by 5.5 percent and 2.1 percent, respectively. In nondurable goods industries, productivity grew 0.7 percent in the second quarter as hours fell faster than output, reflecting decreases of 1.3 percent in output and 2.0 percent in hours.
In total manufacturing, output per hour rose 2.6 percent from the second quarter of 2007 to the second quarter of 2008. For the entire 2000-2007 period, manufacturing productivity grew at a 3.7 percent annual rate.
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 July 2008, the ISM index of manufacturing registered 50 percent, a decrease of 0.2 percentage point when compared to June’s seasonally adjusted reading of 50.2 percent. 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 was basically unchanged in July, while the overall economy expanded for the 81st 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 July were: New Orders down 4.6 percent, Production up 1.4 percent, Employment up 8.2 percent, Supplier Deliveries unchanged, and Inventories down 6.2 percent
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Office of Competition and Economic Analysis
Manufacturing and Services
International Trade Administration
U.S. Department of Commerce
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