Friday's news releases will bring us the U.S. employment picture for April. If economists have got it right, nonfarm payrolls will show a rise of about 200,000, on a par with February and March, and the seventh consecutive month of net job creation. The recovery is turning out to be old-school: even though manufacturing just accounts for 11 percent of the work force these days, the sector has added 21 percent of the new jobs this year, and 40 percent of the new positions of the past 12 months. But this growth has its limits.
Job growth in the U.S. is still pretty thin -- from March 2010 to March 2011, employees on nonfarm payrolls increased by just one percent, to 130.7 million. One pocket of strength, however, has been the manufacturing sector, and many of the gains have been made in the old-line state of Michigan.
This table shows job growth in the top six states by the number of new jobs, and the percentage increases from March 2010 to March 2011. As a rule, the biggest states are adding the most jobs, but hitting above its weight is Michigan, with a 2.1 percent increase, of which nearly 40 percent is in manufacturing.
Michigan leads with about 30,000 new manufacturing jobs year over year, followed by Wisconsin with about 19,000, and Ohio with 14,000. Boosting employment is a rebound in auto sales, as well as auto components, as a report in the Financial Times relates today.
Texas employment is growing in services businesses, as well as education and health care and construction.
But there are limits to the manufacturing growth. As we well know, there isn't as much of it going on here these days. And I was also struck by a statistic in coverage of Caterpillar's earnings report last week:
Caterpillar made a net profit of $1.23bn, or $1.84 per share, up from $233m, or 36 cents per share, in the same period last year, and well above analysts' consensus forecasts of about $1.31 per share. Revenues rose to $13bn from $8.2bn a year earlier [or over 50 percent].
Equipment sales were up 63 per cent from the first quarter of 2010, which Caterpillar said was explained by booming demand.OK, those are great increases in volumes. Much of the gain came from China and other emerging markets; two-thirds of Caterpillar's sales were outside the U.S. But on the cost side:
At the same time, manufacturing costs increased just 3 per cent, underlining how the company shed jobs and boosted productivity in the downturn.A 63 percent gain in sales with just three percent more manufacturing costs? That highlights two important points -- that the U.S. economy is not driving the growth in our companies' sales, and in turn our jobs or for that matter our stock market, and even with strong sales overseas, that a lean structure of today's manufacturing sector may in the end not provide all that many jobs.