The US manufacturing sector continues to be an important pillar of the US economy, as well as a large buyer of staffing services — to the tune of more than $20 billion dollars each year. This article examines the latest government data to identify growth trends in the sector as a whole, as well as those industries within manufacturing that are showing the best growth.
Let the Hiring Begin
2016 was a tough year for the manufacturing sector, weighed down by sluggish growth in the US and global economy, a strong dollar (which makes exports more expensive to end clients, and competing imports more attractive to US purchasers), and uncertainty prior to the presidential election. As a result, employment in the manufacturing sector logged its first annual decline (23,000 jobs or 0.2%) since the Great Recession, despite modest GDP growth in the overall economy.
A slight decline in manufacturing jobs in 2016 was also tracked via the Federal Reserve Bank’s regional manufacturing surveys, where a small net percent of manufacturing firms reported a decrease in number of employees each month throughout last year, as shown in Figure 1.
Figure 1. Net percent of manufacturing firms that increased employment (3 mo. avg.)
Source: Average of New York, Philadelphia, Richmond, Kansas City, and Dallas Federal Reserve District manufacturing surveys.
However, employment growth and outlook in manufacturing appears to have markedly improved in December and January, as also shown in Figure 1 for both the “current month” and “six months ahead” readings. The likely explanation for this uptick is the end of election uncertainly and optimism that the new “pro-business” federal administration will bring faster GDP growth and reduced business regulations. Expansion plans in manufacturing are also indicated by growth in the Institute for Supply Management’s manufacturing PMI index readings of 56 in January and 54.5 in December (where levels above 50 indicate growth).
Growing Jobs the Fastest
Although total US manufacturing jobs declined slightly to 12.3 million jobs at the end of last year, an examination of 18 manufacturing industries shows a variety of job growth rates, as shown in Figure 2, where industries are listed from largest to smallest by number of jobs, along with percentage growth in jobs over the past year.
Figure 2. Manufacturing industry employment and 2016 job growth rates
In the spirit of the business adage “follow the money,” here we highlight some of the manufacturing industries that have shown the fastest rates of job growth:
- Food manufacturing, the largest manufacturing subsegment with 1.5 million jobs, added 33,000 jobs last year, representing 2.2% growth. With US consumers pressed to find time to cook, demand continues to grow for the broad array of processed food options available at supermarkets or shipped directly to homes — from fish sticks to yogurt to pre-cut fruits and vegetables and thousands of other products in between. As food manufacturing is typically time sensitive, labor intensive, and not work that can be offshored, it is an industry that has been and continues to be a significant purchaser of industrial staffing.
- The breweries, wineries and distilleries industry (a segment of beverage manufacturing) added 12,000 jobs last year, representing 9.6% job growth, by far the fastest job growth rate of any of the manufacturing subsegments. Driven by the boom in craft beer production, employment in this industry has roughly doubled over the past 10 years to reach 140,000 jobs.
- The motor vehicles and parts manufacturing industry grew by 19,000 jobs (2.1%) last year to reach 945,000 jobs. US car and truck sales reached a record 17.6 million units last year, slightly above the 17.5 million units sold in 2015, with record sales fueled by the need to replace aging vehicles, low interest rates and product innovations.
- The following three manufacturing industries showed job growth driven by the ongoing expansion in the construction sector: nonmetallic mineral products (2.0% job growth), furniture and related products (1.7%) and wood products (1.3%). Nonmetallic mineral products include sheetrock used for walls, cement and concrete, and glass products. As the current economic expansion continues, and aided by low interest rates, both residential and commercial construction sectors have grown, fueling demand for raw materials and complimentary products.
After a sluggish 2016, the time is now for staffing firms to reach out to their manufacturing clients to position themselves to take advantage of the current uptick in hiring, optimism and business investment. In addition, staffing firms would be well served to take notice of those specific manufacturing industries experiencing above average growth as described in this article.