U.S. manufacturing sector shed 26,000 jobs in November, highlighting persistent challenges amid overall economic growth.
At a Glance
- U.S. manufacturing industry lost 26,000 jobs in November 2024.
- Private employers added 146,000 jobs, below the expected 150,000.
- Manufacturing sector contracted for the eighth consecutive month.
- Services sector added 140,000 jobs, showing continued expansion.
- U.S. economy projected to grow at 3.2% in the fourth quarter.
Manufacturing Sector Struggles Persist
The U.S. manufacturing industry continues to face significant headwinds, as evidenced by the loss of 26,000 jobs in November, according to the ADP National Employment Report. This decline follows a previous loss of 19,000 factory positions in October, indicating ongoing challenges in the sector. The Institute for Supply Management (ISM) report further highlights these difficulties, showing that manufacturing has been contracting for eight consecutive months.
Despite some positive indicators, such as new orders expanding for the first time in eight months and slower rising input costs, the overall picture remains concerning. The percentage of manufacturing GDP that contracted in November rose to 66%, up from 63% in October. These figures underscore the persistent struggles facing American factories.
US Factories Cut 26,000 Jobs in November as Manufacturing Woes Persist https://t.co/NgVnjyh5VC
— John Bates (@JohnBates774380) December 5, 2024
Mixed Performance Across Industries
While manufacturing faces challenges, other sectors of the economy show more positive trends. The construction sector added 30,000 jobs in November, and the mining and natural resources industry increased by 2,000 jobs. However, goods-producing industries as a whole showed a net gain of only 6,000 positions for the month.
“While overall growth for the month was healthy, industry performance was mixed. Manufacturing was the weakest we’ve seen since spring. Financial services and leisure and hospitality were also soft.” Nela Richardson, ADP chief economist
The services sector, in contrast to manufacturing, has been performing better. Economic activity in services expanded for the fifth consecutive month in November, although the ISM nonmanufacturing index slipped to 52.1, indicating growth at a slower pace than in October. The services sector added 140,000 jobs in November, with significant contributions from education/health services and trade/transportation/utilities.
Factors Affecting Manufacturing Performance
Several factors contribute to the ongoing challenges in the manufacturing sector. Sluggish global growth, high financing costs, and an uncertain U.S. policy outlook are all creating headwinds for American factories. The recent presidential election has not fully resolved policy uncertainties, leaving the manufacturing sector on tentative footing as it enters 2025.
“Over the past several months, we’ve noted that the manufacturing sector seemed more or less stuck in a holding pattern, with sluggish global economic growth, still-high financing costs, and an uncertain outlook for U.S. tax, regulatory, and trade policy acting as stiff headwinds. While the election is behind us, the policy outlook remains uncertain. As such, the manufacturing sector will remain on very tentative footing into 2025 with a meaningful rebound further off in the distance than we and many others had anticipated would be the case.” Richard Moody, chief economist at Regions Financial Corporation
Despite these challenges, there are efforts to revitalize the manufacturing sector. President-elect Donald Trump has plans to boost manufacturing by cutting regulations and lowering energy costs. However, the effectiveness of these measures remains to be seen, and a significant turnaround in the sector may take time to materialize.
Overall Economic Outlook Remains Positive
While the manufacturing sector faces difficulties, the broader U.S. economy continues to show strength. The Federal Reserve Bank of Atlanta projects GDP growth at 3.2% in the fourth quarter, up from 2.8% in the third quarter. This growth, coupled with the expansion in the services sector, suggests that the overall economic picture remains positive despite the challenges in manufacturing.
As the U.S. economy navigates these mixed signals, policymakers and industry leaders will need to address the specific challenges facing the manufacturing sector while capitalizing on strengths in other areas. The coming months will be crucial in determining whether manufacturing can regain its footing and contribute more robustly to the nation’s economic growth.
Sources:
- US Factories Cut 26,000 Jobs in November as Manufacturing Woes Persist
- Manufacturing sector sheds 78K jobs in last three months