US manufacturing jobs growth up 128% in 2014 but wages not so strong

Posted on 12 Jan 2015 by Tim Brown

The number of US manufacturing jobs increased by 17,000 in December 2014, just above the monthly average for the sector of 16,000 new jobs per month in 2014 and up from an average of 7,000 per month in 2013.

According to the figures from the Bureau of Labour Statisitcs, durable goods (+13,000) accounted for most of the December’s US manufacturing jobs gain.

The unemployment rate for durable goods (ie. fridges, bricks, cars) decreased 2% for the year from 5.8% in 2013 to 3.8% in 2014 while non-durable goods decreased from 5% to 4.2%.

Total nonfarm payroll employment increased by 252,000 in December to round out a positive 2014 performance with an average of 246,000 jobs created per month, up from 194,000 in 2013.

The unemployment rate declined by 0.2% to 5.6% in December, and the number of unemployed persons declined by 383,000 to 8.7m. Over the year, the unemployment rate dropped 1.1% with the overall number of unemployed persons reduced by 1.7m.

“Better than expected non-farm payroll figures provide further evidence that the US economic recovery is gathering pace,” said David Lamb, senior dealer at the foreign exchange specialists FEXCO.

“This is the 11th month in a row that the number of new jobs added has been above 200,000. On a global level, the US is pulling ahead of other global economies in terms of economic recovery.

“If this recovery doesn’t run out of steam, the Fed will come under increasing pressure to hike interest rates sooner rather than later.”

US unemployment rate Dec 2012 to Dec 2014

The December number of long-term unemployed (those jobless for 27 weeks or longer) was however largely unchanged at 2.8m and accounted for 31.9% of the unemployed but during 2014 the number of long-term unemployed declined by 1.1m.

The number of involuntary part-time workers (individuals who would have preferred full-time employment but were working part time because their hours had been cut back or because they were unable to find a full-time job) was little changed in December at 6.8 million.

“The proportion of Americans in work is now approaching the Fed’s estimates for full employment,” said Peter Elston, Global Investment Strategist at Seneca Investment Managers.

“With wage growth slowing and core inflation still comfortably below the Fed’s target, monetary policy will remain very supportive.

“We’re in a sweet spot for the market: growth is not so strong that the economy overheats while the Fed will ensure that growth doesn’t stagnate.

“We probably need to keep an eye on the effect of the strong Dollar and whether or not ongoing oil rig closures will have a broader impact on growth. But for the time being recession risk remains extremely low.”

Commenting on the figures, Apple said it is responsible for creating up to one million jobs in the US with its retail employees and engineers as well as third-party application developers, manufacturers and suppliers.

The technology company created a web page claiming it is responsible for 1,027,000 Apple-related US jobs, consisting of 627,000 jobs tied to its iOS ecosystem, 334,000 jobs generated from its spending and growth, and 66,000 company employees.

However, the company did not comment whether it had made any impact on the average hourly earnings figures. The figures for all employees on private nonfarm payrolls decreased by 5 cents to $24.57 in December, following an increase of 6 cents in November. Over the year, average hourly earnings have risen by 1.7 percent, just above inflation which to November was 1.3%, down from 1.7% in 2012.

In December, average hourly earnings of private-sector production and nonsupervisory employees decreased by 6 cents to $20.68.

“Wages going into reverse while the economy and job levels improve is verging on the freakonomic,” said Marcus Bullus, trading director of MB Capital.

“The mixed signals in this data make it really difficult for the markets to digest. More jobs than expected in December, and big upward revisions in October and November, but pay packets remain under pressure.

“2014 may have been the best year for jobs since 1999, but it’s also the year in which the employment market went off-piste. We’re dealing with an economics that few economists recognise.

“Wage anomalies aside, this is nevertheless a solid figure that we can at least enjoy without worrying about an interest rate rise. All in all, this is as good a start to 2015 as we could probably have hoped for.”