The J.P. Morgan Global Manufacturing PMI contracted for the fourth straight month, albeit up from 49.3 in July, the lowest reading since October 2012, to 49.5 in August. There continued to be some optimism that future output would rebound over the coming months.
Eleven of the top 20 markets for U.S.-manufactured goods experienced a contraction in manufacturing activity in their economies in August. This contraction affected six of the top seven export markets, with only China seeing a very slight expansion from that list, surprisingly rebounding from a contraction in the June and July data.
Like many other recent labor market indicators, the Jolts report signals that job market conditions are reasonably healthy, but that they are not as upbeat as they were at some earlier stages of the expansion,” Daniel Silver, an economist at JPMorgan Chase & Co., wrote in a report.
Job openings in the manufacturing sector jumped to another all-time high, rising from 515,000 in June to 522,000 in July. This was led by strength in postings from durable goods manufacturers, with openings also increasing to a new record level. These results echo ongoing concerns about the difficulties of finding talent in the tight labor market, which manufacturers continue to cite as their top challenge.
More importantly, for the 17th straight month, the U.S. economy reported more job openings than the number of people looking for work (6,063,000 in July). That statistic suggests there were roughly 1.15 million more job postings than there were unemployed people to fill them.
In addition, the number of quits in the economy soared to a new all-time high, rising to 3,592,000 in July. This suggests that there is a lot of churn in the labor market, with more Americans exploring their options. (Manufacturing quits had hit a record level in April, but they have fallen back since then.)
IMMIGRATION ISSUE: The policy issue flying under the radar: STEM Optional Practical Training. The STEM OPT program allows recent foreign-born graduates of American universities to work in the U.S. for up to three years, explain Boerstling and Hall. As they put it, It’s a critical talent pipeline for manufacturers, enabling them to recruit many recent graduates, especially those with master’s degrees and Ph.D.s in the STEM fields.”However, the program has been challenged in court, and the administration has also voiced opposition to it. A quick recap of the NAM’s defense of the program:
“Last fall, the NAM, along with the Chamber and ITI, asked the court for permission to intervene in the case in order to defend the program, which is especially important if the administration chooses not to mount a strong defense. In July, the court granted our motion to intervene.” The litigation continues this fall, and the NAM will continue actively defending this important program.”
Of course, the NAM is also active on many other key immigration issues, including Dreamer legislation, lifting per country caps and the administration’s proposed merit-based plan. Another immigration item on the horizon: the Supreme Court is reviewing DACA this term, so stay tuned.
NAM Manufacturing News: “Manufacturing production rebounded in August, up 0.5 percent. It was the third increase in the past four months, providing some encouragement that the sector might be stabilizing despite a challenging year so far. Nonetheless, manufacturers have struggled due to weaker global growth and trade uncertainties over much of the past 12 months, with a decline of 0.4 percent since August 2018, the third negative reading so far in 2019. Manufacturers in the New York and Philadelphia Federal Reserve Bank districts both reported expansions in activity in September, with positive expectations for the next six months. In each of these surveys, respondents were experiencing the fastest paces of input cost growth so far this year.