08202019Tue
Last updateMon, 19 Aug 2019 4pm

Manufacturing Productivity Down 1.6% in Second Quarter

Manufacturing sector labor productivity decreased 1.6% in the second quarter of 2019, the U.S. Department of Labor reports, as output decreased 2.1% and hours worked declined 0.5%. Productivity declined 0.9% in the durable manufacturing sector, reflecting a 1.8% decrease in output and a 0.9% decrease in hours worked. Productivity decreased 2.6% in the nondurable manufacturing sector as output fell 2.4% and hours worked rose 0.3%. Over the last four quarters, total manufacturing sector productivity increased 0.2%, as output increased 0.4% and hours worked increased 0.2%. Unit labor costs in the manufacturing sector increased 5.8% in the second quarter of 2019 and increased 4.3% from the same quarter a year ago.


Industrial Production Dropped in July

U.S. industrial production declined 0.2% in July. Manufacturing output decreased 0.4% last month and has fallen more than 1.5% since December 2018. Durables, nondurables and other manufacturing all posted decreases in July. Production fell for most major durable goods categories. The largest declines were recorded by wood products, machinery and nonmetallic mineral products, while the only sizable gain was registered by aerospace and miscellaneous transportation equipment.

Houston Manufacturing Executives See Contraction Ahead

The Houston Purchasing Managers Index (PMI) registered 51.4 in July, slightly up from 51.2 in June. The region’s PMI has signaled expansion in overall economic activity for 36 consecutive months and manufacturing activity for 23 consecutive months.

“But the index that measures executives expectations for the next three months sunk further as executives see the sector contracting. The index fell to 48.7 from 49.4 in June,” The Houston Chronicle reports.

U.S. Companies Lead in Value Creation, Asia Catching Up

U.S. companies continue to lead the way among the world’s large-cap value creators, taking 7 of the top 10 spots and 11 of the top 20 for global large-cap companies in the 2019 Value Creators rankings released by Boston Consulting Group.

Only 2 of the top 10 large-cap value creators and 5 of the top 20 are based in Asia, reflecting the disproportionate number of North American companies that rank among the largest companies by market capitalization. But a look at performance beyond the top 20 large-cap value creators reveals a much different picture. Among the top 100 performers, 28% are North American and 55% are Asian. Similarly, among the 330 companies that rank in the top 10 in their industry, 29% are North American and 45% are Asian.

Global Manufacturing Off to Weak Start in Third Quarter

The downturn in the global manufacturing sector extended into its third consecutive month in July. Production and new order intakes declined further, as conditions in many domestic markets remained soft and international trade volumes continued to contract. These negative trends filtered through to the labor market, resulting in another round of job losses. At 49.3 in July, a tick below June’s reading of 49.4, the J.P. Morgan Global Manufacturing PMI signaled contraction for the third straight month and fell to its lowest level since October 2012.

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