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US manufacturing gathered strength and expanded for the 13th straight month in August; Private sector employment fell 10,000; Construction spending dipped to 10-year low
By Finfacts Team
Sep 1, 2010 - 3:22:11 PM
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The US manufacturing sector gathered strength and expanded
for the 13th straight month in August, according to an industry report released
Wednesday. Meanwhile, private sector employment decreased
by 10,000 from July to August on a seasonally adjusted basis and construction
spending fell in July to the lowest level in 10 years.
Norbert J. Ore, chair of the Institute for Supply
Management Manufacturing Business Survey Committee
commented:. "Manufacturing
activity continued at a very positive rate in August as
the PMI rose slightly when compared to July. In terms of
month-over-month improvement, the Production and
Employment Indexes experienced the greatest gains, while
new orders continued to grow but at a slightly slower
rate. August represents the 13th consecutive month of
growth in US manufacturing."
Eleven of
the 18 manufacturing industries are reporting growth in
August, in the following order: Primary Metals; Apparel,
Leather & Allied Products; Transportation Equipment;
Fabricated Metal Products; Electrical Equipment,
Appliances & Components; Miscellaneous Manufacturing;
Computer & Electronic Products; Paper Products; Chemical
Products; Food, Beverage & Tobacco Products; and
Printing & Related Support Activities. The five
industries reporting contraction in August are:
Furniture & Related Products; Petroleum & Coal Products;
Nonmetallic Mineral Products; Plastics & Rubber
Products; and Machinery.
Manufacturing continued to grow in August as the PMI
(Purchasing Managers' Index) registered 56.3%, an
increase of 0.8 percentage point when compared to July's
reading of 55.5%. A reading above 50% indicates that the
manufacturing economy is generally expanding; below 50%
indicates that it is generally contracting.
A PMI in
excess of 42%, over a period of time, generally
indicates an expansion of the overall economy.
Therefore, the PMI indicates growth for the 16th
consecutive month in the overall economy, as well as
expansion in the manufacturing sector for the 13th
consecutive month. Ore stated, "The past relationship
between the PMI and the overall economy indicates that
the average PMI for January through August (57.8
percent) corresponds to a 5.3 percent increase in real
gross domestic product (GDP). In addition, if the PMI
for August (56.3%) is annualized, it corresponds
to a 4.8% increase in real GDP annually."
Private Sector Employment
Private sector employment decreased by 10,000 from July to
August on a seasonally adjusted basis, according to the latest ADP National Employment Report®
released today.
The US Department of Labor
will issue the monthly employment report on Friday, which includes the public
and private sectors.
Nonfarm Private Employment Highlights – August Report:
Total employment: -10,000
Small businesses* -6,000
Medium businesses** -5,000
Large businesses*** 1,000
Goods-producing sector: -40,000
Service-providing sector: +30,000
Addendum:
Manufacturing industry: -6,000
* Small
businesses represent payrolls with 1-49 employees
** Medium businesses represent payrolls with 50-499 employees
*** Large businesses represent payrolls with more than 499
employees
According to the ADP
Report, employment in the service-providing
sector rose by 30,000 in August, the seventh consecutive monthly gain. This
increase was not enough to offset an employment decline in the goods-producing
sector of 40,000. Construction employment dropped by 33,000 during August and
manufacturing employment declined 6,000, the second consecutive monthly decline.
“Today’s ADP National Employment Report shows that US private
sector employment remains essentially flat,” said Gary C. Butler, president and CEO of ADP.
“Employers require economic certainty and a favorable
environment in order to expand their businesses and create jobs. To achieve job
growth, our nation’s policymakers should take stronger actions to incentivize
businesses to innovate, invest and expand.”
The private sector lost 10,000
jobs from July to August but the number of planned layoffs fell 17% to hit the
lowest level in 10 years, with Joel Prakken, chairman of Macroeconomic Advisers:
Construction Spending
US construction spending fell in July to the lowest
level in 10 years, hit by a slumping housing market
following the ending of a government buyer tax
credit in April.
Spending on construction projects
fell by 1.0% to a seasonally adjusted annual rate of
$805.16bn compared to June, the Census bureau said
Wednesday. June spending was adjusted down, dipping
0.8% instead of rising 0.1% as previously reported.
May was also revised sharply lower.
