- Manufacturing employment rose by 13,000 in January, and nonfarm payrolls increased a surprisingly strong 467,000, well above consensus estimates. The unemployment rate edged up from 3.9% to 4.0%, with the labor force participation rate rising from 61.9% to 62.2%, the best since March 2020. Average hourly earnings for production workers in manufacturing rose 5.2% year-over-year in January, matching the pace in June and August last year, all of which were the fastest since September 1982.
- Despite the encouraging numbers, omicron and supply chain issues likely impacted these data and others. For instance, 8.8 million Americans were out sick themselves with COVID-19 or caring for someone with the virus at the end of December and beginning of January. Perhaps the Federal Reserve says it best when it notes that the outlook depends on the “path of the virus” and increased vaccinations.
- Meanwhile, there were 856,000 manufacturing job openings in December. It was the ninth straight month with openings that have exceeded 800,000, with job postings remaining well above pre-pandemic levels. Nonfarm business job openings rose from 10,775,000 in November to 10,925,000 in December, which was not far from the record set in July, which was 11,098,000.
- There were 6,319,000 unemployed Americans in December, which translated into 57.8 unemployed workers for every 100 job openings in the U.S. economy. Nonfarm business layoffs or other discharges fell to 1,169,000 in December, the fewest in the history of the series. Quits also remained not far from record levels.
- The ISM® Manufacturing Purchasing Managers’ Index® declined from 58.8 in December to 57.6 in January, with supply chain, workforce, COVID-19 and price issues weighing heavily on sentiment despite solid (but slowing) demand. The index for prices rose and remained very elevated despite decelerating from June’s pace, which was the fastest since July 1979.
- New orders for manufactured goods declined 0.4% in December, pulled lower by steep declines in aircraft and parts sales, which can be highly volatile from month to month. Excluding transportation equipment, manufacturing orders edged up 0.1% in December, rising for the 10th consecutive month to another all-time high.
Overall, the manufacturing sector continues to expand strongly—despite lingering supply chain, workforce and pricing pressures—with new factory orders soaring 13.3% year to date.