Economic Report: Manufacturing Layoffs in September Fell to Lowest Level Since February 2017

AICC, through its membership in the Council of Manufacturing Associations, is pleased to present the "Monday Economic Report" from the NATIONAL ASSOCIATION OF MANUFACTURERS (NAM).

By Chad Moutray, Ph.D., CBE – November 16, 2020

NAM Weekly Toplines: 

• There were 456,000 manufacturing job openings in September, pulling back somewhat from the 469,000 postings in August, which was the best reading since July 2019. Overall, there were 1.95 unemployed workers for every one job opening in September, down from 4.6 in April but up from 0.8 in February.
• Encouragingly, nonfarm business layoffs decreased from 1,533,000 in August to 1,333,000 in September, an all-time low. Meanwhile, layoffs in the manufacturing sector declined from 102,000 to 90,000, the lowest since February 2017 and well below the 635,000 layoffs in April.  
• One sign of improved health is the “churn” seen in the labor market, and the number of quits has rebounded in recent months. This is also reassuring. Nonfarm payroll quits rose from 2,839,000 in August to 3,018,000 in September, the most since February, and manufacturing quits edged up from 207,000 to 212,000, a one-year high.
• The National Federation of Independent Business reported that the Small Business Optimism Index was flat at 104.0 in October, suggesting that small business owners remained upbeat overall. With that said, uncertainty was the highest since November 2016 as owners worry about lingering COVID-19 restrictions and operational challenges.
• NFIB survey respondents once again cited difficulties in obtaining enough labor as the top “single most important problem.” Other top concerns included taxes, regulations and poor sales.
• Consumer confidence dropped from 81.8 in October to 77.0 in preliminary November data, according to the University of Michigan and Thomson Reuters. Americans felt less upbeat in their outlook, with respondents reacting to the election and to rising COVID-19 cases.
• Producer prices for final demand goods increased 0.5% in October, the strongest monthly gain since July, boosted by sizable increases in energy and food costs. Yet, core inflation for raw material goods, which excludes food and energy, was flat in October. Overall, core producer prices have risen 0.9% year-over-year, the highest since March but remaining largely in check. 
• Meanwhile, consumer prices were flat in October. Over the past 12 months, the consumer price index has risen 1.2%, and core consumer inflation has increased 1.6% since October 2019.
  
  This week, there will be important updates on industrial production and retail sales that will be closely watched. Manufacturing production pulled back 0.3% in September, and manufacturers will be looking for a possible rebound in October. Overall, output in the sector remains down 6.4% from pre-pandemic levels in February. At the same time, economists will be looking for continuing growth in retail spending, especially heading into the holiday season. Retail sales increased a solid 1.9% in September.

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