The Bureau of Labor Statistics released Manufacturing Productivity Numbers for second quarter 2014 this morning:
“Manufacturing sector productivity increased 3.3 percent in the second quarter of 2014, as output increased 6.9 percent and hours worked increased 3.5 percent. The increase in output was the largest since the second quarter of 2010 (11.6 percent). Productivity increased 3.4 percent in the durable goods sector and increased 4.7 percent in the nondurable goods sector. Over the last 4 quarters, manufacturing productivity increased 2.1 percent, as output increased 3.7 percent and hours increased 1.6 percent. Unit labor costs in manufacturing decreased 1.6 percent in the second quarter of 2014 and increased 0.8 percent from the same quarter a year ago.” BLS release.
If you have been following our blog, this is probably not unexpected news for you.
Kalkaska; August Indicators Bullish on MFG
Precision machining companies make the high precision highly engineered components that make most manufactured products function.
In other news today seasonally adjusted initial claims for unemployment increased to 302,000; the real U-6 unemployment rate is 12.6%.
Given that the Civilian workforce is 156,123,000 persons, this represents 19,671,498 persons unemployed.
If I was unemployed, wanted to work, and I saw the bullish numbers about manufacturing, I know what I would do.
Career benefits for Precision Machining
Photo Credit: StealingFaith
Consensus expectations were for 149,000 new positions to be added in February 2014.
BLS announced that the economy added 175,000 jobs in February, up from 129,9000 in January.
Despite all the “Beat expectations” headlines we have seen on the news, we are not impressed.
- The U-3 Headline unemployment rate actually increased to 6.7 percent while the Labor Participation Rate remained steady.
- The U-6 unemployment rate (un- and under- employment) was 12.6 percent
- One in six men between ages 25 and 54 are jobless
“The economy needs to add about 350,000 jobs each month to push unemployment down to an acceptable level.”- Dr. Peter Morici, University of Maryland
Beat the consensus? That isn’t even critical thinking.
Good news- Our last PMPA Business Trends Report showed that “Ninety-eight percent (98%) of respondents expect employment prospects to increase or remain the same
in our industry over the next three months.”
The reporter on NPR breathlessly gushed about how the unemployment rate fell to 7.7 percent.
They then cut to someone who attibuted the fall in the unemployment rate to ‘jobs picking up in construction.’
(Around 48,000 according to BLS)
Don’t get me wrong, I agree that a gain of 236,000 jobs in February is a significant improvement over the paltry 119,000 reported in January.
But it is nowhere near the 363,000 needed each month to bring our official unemployment rate back down into the neighborhood of 6 percent.
What the reporters are not explaining to you is that in February, the adult population grew buy 165,000, yet the labor force actually decreased 130,0000 as 295,000 additional adults chose not to look for work.
Over a hundred thousand more adults fell out of the labor force in February than found jobs!
LABOR FORCE PARTICIPATION RATE FEB 2013
What does this mean?
It means that the real unemployment rate U-6 is 14.3 %
14.3 percent is the real number for total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force. Source- Bureau of Labor Statistics.
So that 7.7 % figure the breathless news reporters are giving you is wrong.
The reporters are understating by about 50% the actual unemployment rate.
7.7 percent is 54 percent of 14.2 percent.
46% is a fairly large margin of error or “understatement.”
There is hope.
There are jobs for people with skills in advanced manufacturing.
Here is a link to a quick video where I show a list of job openings posted at Cuyahoga Community College Advanced Workforce Center.
If you can take two semesters of skills training at a local community college, you could find yourself working in advanced manufacturing by the second semester.
Professor Peter Morici of University of Maryland contributed some sensemaking to this post.
I attended a holiday dinner with my father and guess who showed up?
I know he’s real. He called me by my nickname when I was a kid (how did he know ?) and asked me how the electric train, three speed bike, and some other requests worked out.
You can see him beside me in the photo above.
I told him they worked out Great!
Funny how those don’t seem to be on my mind these days.
So when the jolly old elf asked me what I’d like this year, I gave him a short list
- I’d like to see US GDP growth hit 4-5%
- I’d like to see U-6 unemployment drop to single digits.
- I’d like to see The White House come up with a budget that gets spending in control and does not further balkanize America into Us vs Them camps.
- I’d like to see fairness out of the Washington Bureacracies and stability in raw material pricing.
- I’d like to see the Treasury Department deal with Chinese currency manipulation.
- I’d like to see the Fed stop printing money and stealing interest from the savings of retirees.
Santa looked at me and said
“I see you have matured quite a bit since I visited you last. Are you sure you wouldn’t rather have a new Bike?”
If Santa was real what would you ask him?