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Manufacturing Biweekly Update

January 12, 2007 (Past Updates)

 

U.S. Manufacturing Trends Current Period Year-to-Date Previous Year
Wage Rates up up up
Profits up up up
Employment down down down
Production up up up
Capacity Utilization up up up
Productivity up up up
Exports na up up
Goods Shipments up up up

 

Biweekly Notes

U.S. automakers tap into the Chinese markets through joint ventures

The big three U.S. automakers continue to grow with the Chinese market. GM’s first joint venture started in 1997. It now operates seven joint ventures and two wholly owned foreign enterprises and has more than 20,000 employees in China. In 2006, GM’s sales grew 32.0 percent over sales in 2005. 2005 sales were up 35.2 percent over 2004. (Forbes) Ford with Mazda started a joint venture in China in 2001. Its sales in 2006 were up 86.6 percent over 2005 sales and 2005 sales more than doubled over sales in 2004. (Forbes) Chrysler through its Jeep division has had a joint venture in China since 1983. In 2007, Chrysler announced its intention to start another joint venture to produce a small “B-class” automobile, The Hornet, for sales in China and worldwide, including exports to the United States. (AutoblogGreen and paultan.org) Chrysler’s parent, Daimler Chrysler, also has joint ventures in China and has announced new joint ventures to produce trucks in China and Taiwan. (DaimlerChrylser)

 

U.S. Manufacturing Key Stats

Manufacturing Wage Rates

Manufacturing Profits

BEA’s estimates of manufacturing profits for the third quarter of 2006 were up over the previous quarter and over the previous year. Manufacturing profits for the third quarter of 2006 rose 14.5 percent or $42.0 billion to $331.9 billion from $289.9 billion of the second quarter. In comparison to the third quarter of 2005, corporate profits for manufacturing rose $71.2 billion or 27.3 percent since the third quarter of 2005 and were above corporate profits at the end of 2005. Third quarter profit estimates were available for all Non-financial industries, manufacturing being a subcategory. BEA annualized profits for all of these industries were currently reported at $1,081.0 billion, up 7.6 percent from the second quarter of this year and up 19.6 percent from the third quarter of last year. [Profits Data; Quarterly Change Data; Graph]

(BEA/DOC GDP data from “Gross Domestic Product and Corporate Profits, BEA 06-58,” Released December 21, 2006; next release is January 31, 2007)Current GDP Data; Archived GDP Data

Manufacturing Employment

In December 2006, manufacturing employment decreased 12,000 to 14.2 million from November. The decline was reported in both, durable and non-durable sub-sectors. Within durable goods, employment continued to decline in industries related to construction, such as Wood Products (-3,000), Furniture and Related Products (-2,400), and Primary metals (-2,800). In addition, job loss was reported in Motor Vehicles and Parts (-4,600). However, employment increased in Computer and Electronic Products (1,000), and Fabricated Metal Products (2,900). For non-durable goods, job losses registered in Food Manufacturing (-2,400), Textile Mills (-1,900), and Chemicals (-1,400). Since December 2005, manufacturing employment has declined by 72,000. 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 December 2006, USDL 07-0003,” released January 5, 2007; next release is February 2, 2007)Current Employment Data; Archived Employment Data

Manufacturing Production

In November 2006, manufacturing output increased 0.3 percent from October, reflecting a 0.7 percent increase in durable and no change in non-durable manufacturing. In durable manufactures, Motor Vehicles and Parts rose 3.7 percent with a decline of 2.4 percent from its year ago level. Conversely, Computer and Electronic Products increased 1.5 percent in this current month and 19.1 percent over a year ago. Also, on the rise in production were Aerospace and Miscellaneous Durables. Among non-durable goods, industries that had small increases in November were Textile & Product Mills and Plastics & Rubber Products, while Petroleum and Coal Products output declined. In slight transition from the October performance, in general, the manufactures output index seems to be moving in the same direction as its 4.6 percent trend from last year. [Production Data; Monthly Change Data; Annual Change Data; Graph]

(Federal Reserve Statistical data from “Industrial Production and Capacity Utilization, G17 (419),” released December 15, 2006; next release is January 17, 2007)Current and Archived Federal Reserve Statistical Data

Manufacturing Capacity Utilization

U.S. manufacturing industries operated at 80.2 percent of capacity in November 2006, a rate 0.9 percent higher than their 1972-2005 average of 79.5 percent and 0.2 percentage points above capacity utilization in October 2006. Durable manufacturing capacity utilization also was up 0.2 percentage points from October to 79.8 percent. Decreases in capacity utilization for the Wood Products, Primary Metal, Nonmetallic Mineral Products, Fabricated Metal products, Furniture & Related Products industries (ranging from 2.6 to 0.5 percentage points) accounted for the lower capacity utilization in Durable Manufacturing while Other Durable Manufacturing trended upward. Capacity utilization in Non-durable Manufacturing was down 0.1 percentage point to 81.8 percent from October. Non-durable Manufacturing industries were at lower capacity utilization except Textile & Product Mills and Plastics & Rubber Products industries. Non-durable manufacturing industries down by more than the industry-average were Food, Beverage & Tobacco Products, Apparel & Leather, and Chemicals, down 0.1, 2.8, and 3.4 percentage points, respectively. [Production Data; Monthly Change Data; Annual Change Data; Graph]

(Federal Reserve Statistical data from “Industrial Production and Capacity Utilization, G17 (419),” released December 15, 2006; next release is January 17, 2007) Current and Archived Federal Reserve Statistical Data

Manufacturing Productivity

Manufacturing productivity rose 6.7 percent in the third quarter of 2006, as output increased 5.1 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. In durable goods industries, productivity increased 9.0 percent in the third quarter of 2006, as an increase of 5.9 percent in output combined with a 2.9 percent decrease in hours. Productivity grew more slowly in the nondurable goods industries, 3.1 percent, reflecting increases of 3.9 percent in output and 0.8 percent 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 06-2039,”released December 5, 2006; next release is February 7, 2007) 3rd Quarter Productivity News Release ; Archived Productivity News Releases

Manufacturing Trade

For the first eleven months of 2006, U.S. manufactured goods exports accounted for 64.2 percent of all U.S. exports of goods and services. During that same period, manufactures exports were 14.4 percent above year ago levels, while imports were up 10.4 percent. The trade deficit in manufactures increased to $563.7 billion (annual rate) for 2006, up from $539.5 billion a year ago.

(Census/BEA/DOC Foreign Trade Statistics data from “U.S. International Trade in Goods and Services, CB06-180, BEA06-54, FT 900,” released January 10, 2007; next release is March 9, 2007) Current Foreign Trade Press Release; Historical Foreign Trade Press Releases

Manufactured Goods Shipments

Shipments of manufactured durable goods in November 2006 (preliminary), up three of the last four months, increased $0.3 billion or 0.2 percent from October to $209.5 billion. This followed a 0.2 percent October increase. Shipments of manufactured nondurable goods, up following three consecutive monthly decreases, increased slightly to $180.5 billion. This was due to petroleum and coal products, which increased $1.0 billion or 3.1 percent to $32.0 billion. [MGS Data; Graph]

(Census Bureau/DOC data from “Manufacturers’ Shipments, Inventories and Orders (M3-2(06)-11),” released January 4, 2007; next release is January 26, 2007) Current Preliminary Data, Current and Archived Durable Goods Press Release

Manufactured Goods Prices

Manufactured Goods Prices typically rebounded in November against the declines registered in October. The producer price index for finished goods, except foods and energy, increased 1.3 percent in November 2006, after falling 0.9 percent in October – a net increase of 0.4 percent from September. Similarly, t he finished energy goods price index rose 6.1 percent in November 2006, offsetting the 5.0 percent decline in October, a net increase of 0.6 percent from September. Finally, the index for finished consumer goods except foods and energy increased 1.1 percent in November 2006, offsetting the 0.8 percent downturn in previous month – a net increase of 0.3 percent from September. [Price Index Data; Annual Change Data]

(BLS/DOL data from “Producer Price Indexes,” released December 19, 2006; next release is January 17, 2007) November 2006 Producer Price Index; Archived Producer Price Indexes

Institute for Supply Management’s (ISM) Index

In December 2006, the Index of Manufacturing Production was 51.4 percent, 1.9 percentage points higher than the 49.5 percent reported in November. An index above 50 points indicates that the manufacturing economy is generally expanding; below 50 points indicates that it is generally contracting.

Economic activity in the manufacturing sector expanded in December following a one-month decline, while the overall economy grew for the 62nd consecutive month, report the nation's supply executives in the latest Manufacturing ISM Report On Business. The components of the index counter to the overall economy in December figures were New Orders (+3.4%), Production (+3.3%), Prices (-6.0%), Supplier Deliveries (+0.6%), Backlog of Orders (-1.5%), and Inventories (-1.3%).

U.S. Industries Reporting Growth in December 2006

  • Apparel, Leather and Allied Products
  • Printing & Related Support Activities
  • Plastic and Rubber Products
  • Miscellaneous Manufacturing
  • Petroleum & Coal Products
  • Computer & Electronic Products
  • Primary Metals
  • Chemical Products
  • Food, Beverage & Tobacco Products

(Institute for Supply Management data released January 3, 2007; next release is February 1, 2007) Current ISM Release; Archived and Current ISM Releases

 

Prepared by: Indumati Jasani
Office of Competition and Economic Analysis
International Trade Administration
U.S. Department of Commerce
(202) 482-3699

 
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