Board Converting News, February 22, 2021

NAM: Manufacturing Employment Down For First Time Since April 2020 According to the National Association of Manufacturers (NAM) manufacturing employment fell in January for the first time since April, with the sector losing 10,000 workers to begin the new year. This suggests that broader mac- roeconomic weaknesses related to the continued spread of COVID-19 have extended to the manufacturing sector, which had been a bright spot in recent months. Over the past 12 months, manufacturing employment has fallen by 575,000 workers. The U.S. economy added 49,000 workers in January, bouncing back somewhat after declining by 227,000 in December. There are 9,603,000 fewer nonfarm payrolls today than one year ago. The unemployment rate fell from 6.7 percent in December to 6.3 percent in January. In the latest data, private nonfarm employment remains 93.5 percent of what was experienced at the beginning of the recession in February 2020. The current recession is much deeper than in recent downturns, with nonfarm payrolls plummeting 14.7 percent in the first two months. The ISM Manufacturing Purchasing Managers’ Index slowed in January but continued to expand solidly, declin- ing from 60.5 in December to 58.7 in January. New orders and production growth remained robust, but respondents cited lingering supply chain disruptions, and raw material

costs rose at the fastest pace since April 2011. Factory orders rose 1.1 percent in December, increas- ing for the eighth straight month but declining 0.8 percent year-over-year. At the same time, durable goods have re- bounded strongly since the pandemic. Over the past 12 months, new orders for durable goods have risen 1.9 per- cent. Sales increased a solid 7.0 percent year-over-year. Encouragingly, new orders for core capital goods—a proxy for capital spending in the U.S. economy—rose 0.7 percent to $72.0 billion in December, a new record. More importantly, core capital goods orders have risen a robust 8.0 percent over the past 12 months. The U.S. trade deficit declined from $69.01 billion in November, an all-time high, to $66.61 billion in December, with the increase in goods exports outstripping the gain in goods imports. Trade volumes were notably lower in 2020 as COVID-19 and a recession-battered the global econo- my. U.S.-manufactured goods exports dropped roughly 15 percent in 2020 relative to 2019. The Private manufacturing construction spending dropped 5.6 percent in December to the lowest level since September 2014. These data fell in every month of the second half of 2020, and private construction spend- ing in the sector plummeted 17.6 percent year-over-year. Manufacturing labor productivity rose 3.0 percent at the annual rate in Q4, boosted by continued rebounds in output. Yet, labor productivity in the sector edged down 0.2 percent in 2020 overall.

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February 22, 2021

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