In case you missed it yesterday, data on orders and shipments of durable goods [1] (which account for around half of all manufacturing output and value added) were released by the U.S. Census Bureau. This is a good opportunity to assess how the manufacturing sector in 2012 is doing, and to do that, we look at a variety of indicators.
Manufacturing employment continues to be a bright spot in 2012, and the sector has added 111,000 jobs over the past three months. Further, average weekly hours in the manufacturing sector are at a level we haven’t seen in quite some time: average weekly hours of manufacturing production workers in February were 41.9, a level not seen since Nov. 1997-Jan. 1998, and excluding those few months, you have to go back to 1945 to see a longer average work week. The fact that average weekly hours are at such a high level may bode well for future employment gains.
These extra workers are translating into more production. According to the Federal Reserve [2], manufacturing output has increased sharply over the past three months (averaging 0.8 percent per month), the fastest gains in over a year.
Production goes up when new orders go up, and yesterday’s release showed that new orders increased 2.2 percent in February, rebounding from January’s 3.6 percent decline. However, keep in mind that new orders shot up at the end of last year, gaining 3.3 percent in December 2011.
The final indicator we examine closely comes from the Institute for Supply Management; that series suggest that manufacturing is expanding, but perhaps not as quickly as previously. However, we’ll be looking closely at first March data, which will be released next week.
~Mark Doms, Chief Economist, U.S. Department of Commerce
March 29, 2012
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