US Manufacturing is NOT Doing Well

manufacturing 2016-2.xlsx

Just read an article stating that US manufacturing is doing great and US employment was at a 7 year high.  So first thing I did is pulled the non-seasonally adjusted data from BLS to see if this was really true or if it was just a byproduct of the seasonal adjustment.  I've known for months that all data has been pointing towards a US manufacturing slowdown, so I was wondering if we had actually made a significant new high.  The data is shown above, plotted YoY for seasonal clarity.

For a true 7 year YoY comparison I compared Jan 2016 to Jan 2009.   What did I find?  12.45M jobs in Jan 2009 and only 12.25M jobs in Jan 2016, so 200k down.   From the beginning I knew the author likely used seasonally adjusted data, but I also discovered he compared Feb 2009 to Jan 2016.  The Jan 2009/Jan 2016 comparison still shows a 200k drop using the seasonally adjusted data, but only a 24k drop when compared to Feb 2009.  With rounding Feb 2009 equals Jan. 2016 at 12.4MM.

Still the article is clearly misleading.  If you look at 2014 vs 2015 employment data it is clear to see since August US manufacturing employment levels have been contracting towards 2014 levels.  Using non-adjusted data, YoY data shows November and December 2015 employment levels were only 0.285 and 0.21% higher than in the same 2014 months.  This is after showing 1.4% to 1.7% YoY gains each month in the period June 2014 to May 2015.  The only glimmer of hope for manufacturing in the latest jobs report is that January shows 0.42% gain YoY compared to an average of 0.25% YoY the previous two months.  Yet 0.42% is still below the 0.54% shown in October 2014.  Regardless, there is clear contraction with little indication that manufacturing jobs won't cross below 2015 levels in 2016.  So far the most optimistic estimation would be that 2016 employment levels closely match 2015 levels.

Of course the article does not even begin to talk about how manufacturing employment is still down 2MM jobs from the 2005/2006 peak.  That is about a 14% loss in manufacturing jobs in a decade while the US working age population grew 6.6% over the same period.  

2/9/2016 Update:  Even the fundamental claim that 29,000 manufacturing jobs were added in January is totally due to the magic of seasonal adjustment.  The reality is that in absolute, non-adjusted terms, manufacturing jobs are almost always lost in January.  January 2016 was no different with 66k lost.  This is a small loss by January standards.  But when a wider view is taken total manufacturing job losses from August thru January were 155k, compared to a 93k loss last year, and 120k loss the previous year.  A 155k loss exceeds the average loss  (-134k) over the last 6 years of the Aug-Jan period.

Below I'm including a plot of seasonally adjusted data which clearly shows the same trend as the non-seasonally adjusted data set.

manufacturing, adj 2016-2.xlsx