Manufacturing Biweekly Update
December 1, 2006 (Past Updates)
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Biweekly Notes
Construction and the Manufacturing Sector
The popular and trade press have given considerable play to the slow-down in the residential construction sector. For example, the Census Bureau reports that the value of residential construction in October 2006 was 9.4 percent less than in October 2005. This has implications for the manufacturing sector, where about half of the value of construction is materials, most of which come from the manufacturing sector. Less reported, however, is that the value of non-residential construction was up 13.6 percent in October 2006 over October 2005, and that total construction was up 0.5 percent over the same period. Consequently, the effect on manufacturing of the slowdown in the residential sector is offset by robust growth in non-residential construction. Suppliers of residential construction will likely be negatively impacted, while non-residential construction suppliers are likely to see flat or modestly increasing demand.
(Census/DOC Construction data from “October 2006 Construction at $1.178.4 Billion Annual Rate,” CB06-176, released December 1, 2006; next release is January 3, 2007)
Current Press Release ; Historical Press Release
U.S. Manufacturing Key Stats
Manufacturing Wage Rates
- The hourly compensation of all manufacturing workers increased 2.9 percent in the third quarter of 2006 (4.8 percent gain in compensation in durable goods sector, and 0.6 percent decrease in the nondurable goods industries). [Compensation Data; Quarterly Change Data; Annual Change Data]
Manufacturing Profits
Revised BEA estimates for manufacturing profits were unchanged from their previous September 28 estimates. For the second quarter of 2006, manufacturing profits fell 3.6 percent or $10.8 billion to $289.9 billion from $300.7 billion in the preceding period (first quarter). However, corporate profits for manufacturing have risen $210.1 billion or 263.3 percent since the second quarter of 2001 and are above corporate profits for 2005. Third quarter profit estimates were available for non-financial industries, of which manufacturing is a part. BEA estimates profits for non-financial industries were an annualized $1,076.4 billion, up 7.2 percent from the second quarter and up 19.1 percent from the third quarter of 2005. [Profits Data; Quarterly Change Data; Graph]
(BEA/DOC GDP data from “Gross Domestic Product and Corporate Profits, BEA 06-51,” released, November 29, 2006; next release is December 21)
Current GDP Data ; Archived GDP Data
Manufacturing Employment
In October 2006, manufacturing employment decreased 39,000 to 14.2 millions from September. The decline was reported in both durable and non-durable sub-sectors. Within durable goods, factory job losses occurred in industries such as Wood Products (-5,000), Fabricated Metal Products (-3,700), Furniture and Related Products (-3,300), and Motor Vehicles and Parts (-14,700). For non-durable goods, job losses registered in Plastics and Rubber Products primarily due to a strike (-13,800) in rubber products manufacturing, and to food manufacturing (-2,800), paper and paper products (-1,600), and textile mills (-1,700). Since June 2006, manufacturing employment has declined by 78,000. Nonetheless, manufacturing employs 14.2 million workers and represents 10.4 percent of total non-farm employment. [Employment Data; Monthly Change Data; Annual Change Data; Graph]
(BLS/DOCEmployment data from “The Employment Situation, USDL 06-1903,” released November 3, 2006; next release is December 8)
Current Employment Data; Archived Employment Data
Manufacturing Production
In October 2006, manufacturing output declined 0.3 percent from September, reflecting a 0.2 percent drop in durable and 0.4 percent decline in non-durable manufacturing. In durable manufactures, motor vehicles and parts fell 3.9 percent with a decline of 10.4 percent from its year ago level. Conversely, computer and electronic products increased 1.6 percent in this current month and 19.5 percent over a year ago. Also, on the rise in production were aerospace and miscellaneous transportation and equipment industries. Among non-durable goods, industries that had small increases were apparel & leather, and printing & support production, while petroleum and coal products output declined. Despite the fall in production from September levels, the manufactures output index was up 4.4 percent from its year ago level. [Production Data; Monthly Change Data; Annual Change Data; Graph]
(Federal Reserve Statistical data from “Industrial Production and Capacity Utilization, G17 (419),” released November 16, 2006; next release is December15)
Current Federal Reserve Statistical Data ; Archived Federal Reserves Statistical Data
Manufacturing Capacity Utilization
U.S. manufacturing industries operated at 80.4 percent of capacity in October 2006, a rate 0.9 percent higher than their 1972-2005 average of 79.5 percent but 0.4 percentage points less than capacity utilization in September 2006. Durable manufacturing capacity utilization was also down 0.4 percentage points from September to 79.8 percent. Decreases in capacity utilization for the Wood Products, Primary Metal, and Motor Vehicles and parts industries (down 1.4, 1.5, and 3.1 percentage points, respectively) accounted for the lower capacity utilization in Durable manufacturing with other Durable manufacturing generally higher. Capacity utilization in Non-durable manufacturing was down 0.5 percentage points to 81.2 percent from September. Non-durable manufacturing industries were at lower capacity utilization except Apparel and leather and Printing and support industries. Non-durable manufacturing industries down by more than the industry-average were Textile and product mills, Petroleum and coal products, and Plastics and rubber products, down 0.7, 3.3, and 1.2 percentage points, respectively. [Capacity Utilization Data; Graph]
(Federal Reserve Statistical data from “Industrial Production and Capacity Utilization, G17 (419),” released November 16, 2006; next release is December15)
Current Federal Reserve Statistical Data ; Archived Federal Reserves Statistical Data
Manufacturing Productivity
Manufacturing productivity increased 5.9 percent in the third quarter of 2006, as output grew 4.2 percent and hours of all workers fell 1.6 percent (seasonally adjusted annual rates). This was the largest quarterly gain in productivity since the third quarter of 2003. In the second quarter, productivity rose 2.7 percent, reflecting a 5.1 percent rise in output and a 2.3 percent increase in hours. Strong productivity growth has resulted in the decline in manufacturing employment. [Productivity Data; Quarterly Change Data; Annual Change Data; Graph]
(BLS/DOL Productivity data from “Productivity and Costs, USDL 06-1902,”released November 2, 2006; next release is December 5)
Current Productivity News Release ; Archived Productivity News Releases
Manufacturing Trade
For the first nine months of 2006, U.S. manufactured goods exports accounted for 64.1 percent of all U.S. exports of goods and services. During that same period, manufactures exports were 14.3 percent above year ago levels, while imports were up 11.1 percent. The trade deficit in manufactures increased to $555.2 billion (annual rate) for 2006, up from $522.0 billion a year ago.
(Census/BEA/DOC Foreign Trade Statistics data from “U.S. International Trade in Goods and Services, CB06-164, BEA06-50, FT 900,” released November 9, 2006; next release is December 12)
Current Foreign Trade Press Release; Historical Foreign Trade Press Releases
Manufactured Goods Shipment
Shipments of manufactured durable goods in October 2006, increased $1.2 billion or 0.6 percent from September to $210.0 billion. This followed a 2.7 percent September decrease. Machinery, up seven of the last eight months, had the largest increase, $0.5 billion or 1.9 percent to $28.3 billion. Manufactured goods shipments were up 6.6 percent from October 2005 with shipments of non-defense and aircraft parts enjoying the largest percentage annual gain, up 32.0 percent from shipments in October 2005 (but down 7.5 percent from September 2006). [MGS Data; Graph]
(Census Bureau/DOC data from “Advance Report on Durable Goods Manufacturers’ Shipments, CB06-174” released November 28, 2006; next release is December 5)
Current Durable Goods Press Release, Archived Durable Goods Press Releases
Manufactured Goods Prices
The producer price index for finished goods, except foods and energy, declined 0.9 percent in October 2006, after rising 0.6 percent in September. The finished energy goods price index fell 5.0 percent in October, 3.4 percentage points faster than the September decline of 1.6 percent. The index for finished consumer goods except foods and energy had dropped 0.8 percent in October after increasing 0.7 percent in previous month. [Price Index Data; Annual Change Data]
(BLS/DOL data from “Producer Price Indexes,” released November 14, 2006; next release is December 19)
Current Producer Price Index; Archived Producer Price Indexes
Institute for Supply Management’s (ISM) Index
- In November 2006, the Index of Manufacturing Production was 49.5 percent, 1.7 percentage points lower than the 51.2 percent reported in October. Index reading above 50 points indicates that the manufacturing economy is generally expanding; below 50 points indicates that it is generally contracting.
- Manufacturing activity in November had declined to its lowest level in 42 months as manifested by the recent index. The last time the PMI registered below 50 percent was April 2003 (46.5 percent). The components of the index counter to the overall November figure were Prices (+6.5%), Supplier Deliveries (+2.6%), Orders Backlog (+2.0%), and Inventories (+0.3%).
U.S. Industries Reporting Growth in October 2006
- Apparel, Leather and Allied Products
- Miscellaneous Manufacturing
- Computer & Electronic Products
- Printing & Related Support Activities
- Plastic and Rubber Products
- Primary Metals
- Chemical Products
- Food, Beverage & Tobacco Products
(Institute for Supply Management data from the “December 2006 Manufacturing ISM Report on Business,” released December 1, 2006; next release is January 2, 2007)
Current ISM Release ; Archived and Current ISM Releases
Prepared by: Elliot Levy
Office of Competition and Economic Analysis
International Trade Administration
U.S. Department of Commerce
(202) 482-1606