U.S. Manufacturing Sector Still Struggling

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Meanwhile, here are the major economic headlines from the last week:

• New orders for U.S. manufactured goods increased 2.6 percent in November while shipments rose 0.5 percent. Unfilled orders expanded by 1.3 percent and the unfilled orders-to-shipments ratio was 6.95, up from 6.91 in October. Inventories also improved slightly, rising 0.1 percent. The inventories-to-shipments ratio was 1.48, unchanged from October.
• U.S. manufacturing lost ground during December, according to the S&P Global U.S. Manufacturing purchasing managers’ index (PMI). The S&P’s reading fell to 47.9, due mostly to a drop in output that caused employers to cut jobs to levels not seen since early in the COVID-19 pandemic. The downturn also was driven by weaker demand domestically and abroad. Meanwhile, the Institute for Supply Management’s U.S. manufacturing PMI rose to 47.4 in December. Despite the improvement, it was the 14th consecutive month the survey indicated contraction in the sector. Read more here.
• The S&P Global Canada manufacturing PMI fell to 45.4 in December, down from 47.7 in November and the survey’s lowest level since May 2020. The output index fell to 45.4 from 46.1 and the new orders index was at 42.5, down from 45.4. New export orders also declined sharply. Read more here.
• Construction spending in the United States increased by 0.4 percent in November, marking the 11th consecutive month of spending growth. Private construction project spending was up 0.7 percent in November, residential construction spending jumped 1.1 percent, and manufacturing-related construction spending hit a $210 billion annual rate, more than triple the average rate in the 2010s. The Federal Reserve Bank of St. Louis has more information here.
• Canadian employment was virtually unchanged in December while the unemployment rate held steady at 5.8 percent. There were more people employed in professional, scientific and technical services, healthcare and social assistance, and “other services,” but those improvements accompanied declines in five industries, including wholesale and retail trade and manufacturing.
• U.S. employers created 216,000 jobs in December as the nation’s unemployment rate held steady at 3.7 percent. Of the 216,000 increase, 6,000 were in the manufacturing industry. Wages were up 4.1 percent from December 2022 to December 2023. Employers added more than 2.9 million jobs throughout 2023. The country’s unemployment rate has been below four percent for nearly two years. In related news: the number of individuals who applied for U.S. unemployment benefits continued to decline in late December.
• The number of job openings in the United States fell to 8.79 million in November, the lowest level in nearly three years, and the number of new hires dropped to the lowest level since April 2020. Manufacturing job openings were at a four-month low and declines in the number of jobs open in the transportation, warehousing, and utilities sectors were the main reason for the overall drop. Read more here.
• In other economic news: New car sales in the United States reached 15.5 million vehicles in 2023, up 12.4 percent from 2022.