Fed Commercial Paper Holdings Rise to $295.1 Billion:
The Federal Reserve increased its purchases of commercial paper to $295.1 billion and its loans to securities firms expanded as the central bank uses its balance sheet to fight the worst financial crisis in seven decades. The Fed released the figures in its weekly balance-sheet report on November 28, 2008.
The U.S. central bank has introduced seven emergency loan programs in the past year aimed at easing the credit crunch as interest-rate cuts failed to stabilize lending and markets. A total of $968 billion in write-downs and losses have accumulated so far since the start of 2007, helping tip economies worldwide.
Under the new Money Market Investor Funding Facility, the Fed plans to lend up to $540 billion to five special funds that buy assets from money-market funds.
In October 2008, average hourly earnings in manufacturing were $17.85, up 0.3 percent from August 2008’s $17.80 (revised), and up 2.9 percent from $17.34 in October 2007.
(BLS/DOL Employment data from “The Employment Situation: October 2008, USDL 08-1617,” released November 7, 2008; next release is December 5, 2008)
http://www.bls.gov/news.release/pdf/empsit.pdf
Manufacturing Wage Rates (Quarterly, Yearly)
The hourly compensation of all manufacturing workers rose 5.0 percent during the third quarter of 2008 (from the previous quarter, at an annual rate), reflecting increases in hourly compensation of 6.0 percent in durable goods subsector and 3.7 percent gain in nondurable goods manufacturing.
For the third quarter of 2008, real hourly compensation, which takes into account changes in consumer prices, decreased 1.6 percent in total manufacturing workers; fell 0.7 percent in durable goods industries, and declined 2.9 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 the total manufacturing sector rose 0.7 percent in 2007 after increasing by 0.8 percent in 2006.
In the second quarter of 2008, manufacturing profits decreased 10.6 percent, or $25.6 billion (at an annual rate), to $214.9 billion from $240.5 billion in the first quarter. Compared with second quarter profits of 2007, manufacturing profits were down $135.9 billion in the second quarter of 2008. Manufacturing profits in 2007 were $12.3 billion above manufacturing profits in 2006.
Third quarter 2008 profits estimates for all non-financial industries (manufacturing being a subcategory) increased 8.6 percent from the second quarter of 2008 to $911.6 billion.
In October 2008, manufacturing employment declined by 90,000 to 13.3 million from September’s (revised) manufacturing employment levels; partly due to a strike in the transportation equipment industry, 27,000 aerospace workers were off payrolls in October.
Among durable goods, the job losses continued in motor vehicles and parts (-9,100). In addition, employment also fell in industries related to construction, such as Fabricated metals (-10,600); Wood products (-6,600); and Furniture and related products (-10,400).
In the nondurable goods, job losses reported in plastics and rubber products (-6,100); apparel (-4,000); and printing and related support activities (-3,900), among others. Food manufacturing added 1,900 jobs over the month.
The manufacturing employment of 13.3 million workers represents 9.7 percent of total non-farm employment.
(BLS/DOL Employment data from “The Employment Situation: October 2008, USDL 08-1617,” released November 7, 2008; next release is December 5, 2008)
http://www.bls.gov/news.release/pdf/empsit.pdf
Manufacturing production rose 0.6 percent in October after a decline of 3.7 percent in September. Excluding the effects of the hurricanes and the aircraft strike, factory production is estimated to have declined about 1 percent in both months.
The output of durable goods industries decreased 1.8 percent, with declines widespread among its components. In addition to a particularly large drop in Primary metals (-4.8 percent), which was due to lower production of iron and steel, decreases also occurred in most other durable goods industries. Only the index for Electrical equipment, appliances, and components moved up (0.6 percent).
The production of nondurable goods rose 3.1 percent after a decline of 4.5 percent in September. The results for its major components were mixed in October. The output of Petroleum and coal products jumped (9.9 percent), as refinery output recovered from the post-hurricane levels. Gains were also recorded in Food, beverage, and tobacco products (0.6 percent), and in Chemicals (5.1 percent). However, the indexes for Textile and product mills (-0.6 percent), Apparel and leather (-1.8 percent), Paper (-0.4 percent), Printing (-0.5 percent), and Plastics and rubber products (-2.1 percent), all declined.
The index for other manufacturing industries (non-NAICS), which consist of publishing and logging, edged down 0.4 percent in October.
In October 2008, manufacturing industries (NAICS based) operated at 73.8 percent of capacity, 5.7 percentage points below their 1972-2007 average of 79.5 percent and 0.4 percentage points higher than their revised capacity utilization in September 2008.
In durable manufacturing, capacity utilization decreased 1.5 percentage points in October from September (revised) to 70.3 percent. Capacity utilization declined in Primary metals (-3.8 percent); Wood products (-2.6 percent); Motor vehicles and parts (-2.2 percent); Aerospace and miscellaneous transportation equipment (-2.0 percent); Furniture and related products (-1.9 percent); Machinery (-1.3 percent); Nonmetallic mineral products (-0.5 percent); Computer and electronic products (-1.0 percent), among others. Capacity utilization increased in Electrical equipment, appliances, and components (0.3 percent).
Capacity utilization in non-durable manufacturing in October rose 2.3 percentage points from September 2008 (revised) to 77.6 percent. Increased capacity utilization was registered in Petroleum and coal products (8.1 percent); Chemical (3.5 percent); and Food, beverage, and tobacco products (0.5 percent). These gains outweighed losses in capacity utilization in Apparel and leather (-1.1 percent); Paper and products (-0.3 percent); Printing and support (-0.5 percent); Textile and product mills (-0.2 percent); and Plastics and rubber products (-1.7 percent).
Compared with the second quarter of 2008, manufacturing productivity decreased 1.0 percent (seasonally adjusted annual rate) in the third quarter of 2008, as output fell 5.8 percent and hours of all persons declined 4.9 percent. This followed a 1.9 percent decline in the second quarter. The third-quarter decline was concentrated in the nondurable goods sector, whereas the second-quarter decrease was due to a drop in durable goods productivity.
In durable goods industries, output per hour grew at a seasonally adjusted annual rate of 3.3 percent in the third quarter of 2008 from the previous quarter, as output and hours decreased by 4.7 percent and 7.7 percent, respectively. By contrast, productivity declined 7.3 percent in the nondurable goods sector in the third quarter as output fell 7.0 percent while hours increased 0.4 percent.
In total manufacturing, productivity increased 1.1 percent from the third quarter of 2007 to the third quarter of 2008, compared to a 3.7 percent average annual growth rate from 2000 to 2007.
The trend of strong productivity growth has resulted in the decline in manufacturing employment.
Year to date September 2008, U.S. manufactured goods exports accounted for 61.0 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 14.8 percent above year ago levels, while imports were up 5.5 percent. The trade deficit in manufactures improved to $461.3 billion (annual basis) for 2008, down from $526.1 billion a year ago.
In October 2008, shipments of manufactured durable goods decreased $5.0 billion or 2.4 percent to $202.9 billion, down three consecutive months. This followed a 0.2 percent September decline.
Transportation equipment had the largest decrease, down $2.4 billion or 4.6 percent, to $48.3 billion. Shipments also decreased in Primary metals (-8.4 percent); Machinery (-3.4 percent); Electrical equipment, appliances and components (-1.0 percent); and Fabricated metal products (-1.0 percent). Shipments, however, increased in Computer and electronic products (3.2 percent).
(Census Bureau/DOC data from “Manufacturers’ Shipments, Inventories and Orders (M3-1 (08)-10, CB08-172),” released November 26, 2008, 2008; next release is December 24, 2008) http://www.census.gov/indicator/www/m3/adv/pdf/durgd.pdf
In October 2008, the Producer Price Index (PPI) for finished goods, except foods and energy, rose 0.4 percent, after increasing by the same percent in September.
The index for finished energy goods moved down 12.8 percent in October following a 2.9-percent decline in September. Gasoline prices dropped 24.9 percent after falling 0.5 percent a month earlier. The indexes for liquefied petroleum gas, diesel fuel, and residential electric power also decreased more than in the prior month.
By contrast, partially offsetting the slowing declines in finished energy goods prices, the index for residential natural gas moved down 5.9 percent compared with an 8.2 percent decline in September. Prices for home heating oil also fell less than in the previous month.
The index for finished consumer foods edged down 0.2 percent in October after rising 0.2 percent in September.
In October 2008, the ISM index of manufacturing registered 38.9 percent, 4.6 percentage points lower than the 43.5 percent reported in September. This is the lowest level for the PMI since September 1982 when it registered 38.8 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.
“It appears that manufacturing is experiencing significant demand destruction as a result of recent events, with members indicating challenges associated with the financial crisis, interruptions from the Gulf hurricane, and the lagging impact from higher oil prices,” says Norbert J. Ore, C.P.M., chair of the manufacturing business survey committee.
Economic activity in the manufacturing sector failed to grow in October, while the overall economy concluded 83 consecutive months of growth, say the nation’s supply executives in the latest Manufacturing ISM Report On Business®.
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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