Manufacturing Construction Soared at Record Pace in January
Monday, March 7, 2022
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Posted by: Alyce Ryan
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 – March 7, 2022 NAM Weekly Economic Report - Private manufacturing construction spending jumped 8.5% to a record $92.86 billion in January, soaring 31.2% over the past 12 months. These data speak to the strength of the manufacturing sector and the need to increase capacity to meet very robust demand.
- New orders for manufactured goods rose 1.4% to a record $544.2 billion in January. Excluding transportation equipment, manufacturing orders rose 1.0% in January, also an all-time high. Overall, the manufacturing sector continued to expand strongly—despite lingering supply chain, workforce and pricing pressures—with new orders soaring 13.6% year-over-year.
- New orders for core capital goods—a proxy for capital spending in the U.S. economy
—rose 1.0% to a record $80.1 billion in January. Core capital goods orders increased a solid 10.7% year-over-year. Meanwhile, factory shipments increased 1.2% to $536.9 billion in January, an all-time high.
- The ISM® Manufacturing Purchasing Managers’ Index®rose from 57.6 in January to 58.6 in February, led by strength in new orders, which grew at the fastest pace in five months. Cost pressures continued to be highly elevated, but with the index for prices declining from 76.1 in January to 75.6 in February. Wait times for deliveries continued to be very long.
- Manufacturing activity strengthened in the Dallas Federal Reserve Bank’s survey, with the composite index of general business conditions rising from 2.0 in January to 14.0 in February, the best reading since October. Survey respondents predicted that wages over the next six months would increase at a record pace.
- Manufacturing employmentrose by 36,000 in February, with robust hiring in the sector despite sizable ongoing challenges. The manufacturing sector added 365,000 workers in calendar year 2021, the most since 1994. In the first two months of 2022, the sector hired 52,000 employees, bringing the total number of employees to 12,607,000 in February 2022. With that said, there remained 178,000 fewer manufacturing employees relative to pre-pandemic levels.
- The average hourly earnings of production and nonsupervisory workers in manufacturing rose to $24.54 in February, up 4.9% from one year ago and remaining very elevated.
- Nonfarm payroll employment increased by 678,000 in February, and the unemployment rate dropped to 3.8%. The labor force participation rate inched up from 62.2% to 62.3%, the best since March 2020, although it remained below the pre-pandemic pace (63.3%).
- The U.S. goods trade deficit jumped to a record $107.63 billion in January in preliminary data. In January, goods exports decreased from $157.62 billion to $154.83 billion. At the same time, goods imports soared from $258.09 billion to $262.46 billion, an all-time high.
- In his semiannual Congressional testimony last week, Federal Reserve Chair Pro Tempore Jerome H. Powell reiterated that the Federal Open Market Committee would likely raise short-term interest rates by 25 basis points at its March 15–16 meeting, rolling back its highly accommodative stance over the course of the coming months.
- The Russian invasion in Ukraine poses challenges to the Federal Reserve’s plans, creating new uncertainties in the marketplace, exacerbating inflationary pressures and dampening global growth. Although much will depend on what happens over the coming days and weeks, commodity prices—especially for food and energy—have already jumped significantly.
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