Manufacturing Buoyed by Global Growth, Optimism
American manufacturing has picked up pace over the last 12 months thanks to steady global economic growth, a rise in energy and other commodity prices, and increased business confidence. Gains across manufacturing, however, have been spotty.
The sector “absolutely has improved relative to where we were a year ago,” said William Strauss, a manufacturing economist at the Federal Reserve Bank of Chicago. He characterized the growth as modest.
U.S. manufacturers have added 156,000 workers since President Trump was elected in November 2016, according to government data.
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Caterpillar increased its domestic workforce by 3,200 from the end of March to 49,700 at the end of September. |
That is a clear turnaround from the loss of 16,000 such jobs during the final year of President Obama’s administration, although the recent growth hasn’t surpassed manufacturing payroll increases in 2011 and 2014, when the sector gained more than 200,000 jobs.
Business investment also has risen, a sign that companies are spending to increase productivity. In the first quarter, investment in plants climbed a seasonally adjusted annual rate of 14.8 percent, the highest since early 2014. Investment in equipment climbed 8.8 percent in the second quarter, the highest in almost two years.
A confluence of factors is helping manufacturing, according to Stanley Black & Decker Inc. Chief Executive James Loree, who cited a shrinking wage differential between U.S. and foreign workers and rapid technological advances in the sector.
But, growth has been inconsistent throughout the industry. Among 70 manufacturing sub-industries tracked by the Labor Department, 19 have seen robust employment increases of 2.5 percent or more since October 2016. Over that same period, 22 industries have seen employment decline, including aerospace and manufacturing of motor vehicles and parts.
The performance of America’s largest manufacturing companies also has been mixed. Of the 10 largest industrial companies in the S&P 500, only Caterpillar, Honeywell Inc. and 3M Co. recorded higher third-quarter profit and earnings per share compared with a year earlier, according to data from Thomson Reuters.
Profit and earnings declined at General Electric Co., Boeing Co., United Technologies Corp., Lockheed Martin Corp. and General Dynamics Corp.
Source: Wall Street Journal