Manufacturing labor productivity continued its ongoing slide during the fourth quarter, according to the Bureau of Labor Statistics. Meanwhile, new orders for manufactured goods also fell between November and December, according to the U.S. Census Bureau. NAM Chief Economist Chad Moutray broke it down for us.
Topline numbers: “Manufacturing labor productivity fell 0.8% in the fourth quarter at the annual rate, extending the 2.6% decline in the third quarter,” said Moutray. “With that said, output rose 4.8% in the fourth quarter, continuing to reflect solid growth in demand for goods despite ongoing challenges with supply chain and workforce issues. However, real hourly compensation decreased 4.5% in the fourth quarter, pulling the headline figure lower. Unit labor costs for manufacturers increased 4.2% in the fourth quarter. For the year, manufacturing labor productivity increased 3.1%, the strongest annual increase since 2010, another year with strong rebounds in activity.”
- Durable and nondurable goods: “Labor productivity for durable goods increased 0.8% in the fourth quarter, with output rising 3.9% but with real hourly compensation declining 3.8%,” said Moutray. “At the same time, labor productivity for nondurable goods decreased 3.7% in the fourth quarter, with output jumping 5.7% but with real hourly compensation dropping 5.1%. Unit labor costs for durable and nondurable goods rose 3.3% and 6.7% in the fourth quarter, respectively.”
- Nonfarm business labor: “Meanwhile, nonfarm business labor productivity soared 6.6% in the fourth quarter, bouncing back from the 5.0% decline in the third quarter,” said Moutray. “Output grew 9.2% for the quarter, and the number of hours worked rose 2.4%. Real hourly compensation declined 1.2%, and unit labor costs ticked up 0.3%.”
Factory orders fall: “New orders for manufactured goods declined 0.4% from $533.1 billion in November to $530.7 billion in December,” said Moutray. “Durable and nondurable goods orders fell 0.7% and 0.2% in December, respectively.”
- “Transportation equipment decreased 3.7% in December, largely from steep declines in aircraft and parts sales, which can be highly volatile from month to month,” said Moutray. “Motor vehicles and parts orders also weakened, down 1.1% for the month. Excluding transportation equipment, manufacturing orders edged up 0.1% in December, rising for the 10th consecutive month to another all-time high.”
The bottom line: “Overall, the manufacturing sector continues to expand strongly—despite lingering supply chain, workforce and pricing pressures—with new orders soaring 13.3% year to date,” said Moutray. “At the same time, new orders for core capital goods (or nondefense capital goods excluding aircraft)—a proxy for capital spending in the U.S. economy—rose 0.3% from $78.97 billion in November to $79.18 billion in December. Core capital goods orders increased a solid 10.6% year-over-year.”