Figure 1: Manufacturing employment in US (blue), and aggregate of Michigan, Pennsylvania, and Wisconsin (red), both in logs, 2018M12=0. December data preliminary. GM strike in October. Source: BLS, author’s calculations.
Michigan, Pennsylvania and Wisconsin aggregate manufacturing employment 1% below peak. In contrast, nationwide manufacturing employment (total, including managerial) has been flat from September 2019.
Most accounts these days suggest the risk of recession has abated, given the strength of various indicators, and the un-inversion of the yield curve. This made me wonder what two key indicators look like in real time on the eve of a recession. Take a look at these two graphs, to see which one denotes data just before a recession.
Yesterday’s employment release indicated a deceleration in nonfarm payroll (NFP) employment growth. Data from other sources suggests that the deceleration over the last year is more marked than indicated by the establishment survey.
Here are some key indicators tracked by NBER’s Business Cycle Dating Committee:
Figure 1: Nonfarm payroll employment (blue), industrial production (red), personal income excluding transfers in Ch.2012$ (green), manufacturing and trade sales in Ch.2012$ (black), and monthly GDP in Ch.2012$ (pink), all log normalized to 2019M01=0. Source: BLS, Federal Reserve, BEA, via FRED, Macroeconomic Advisers (12/30 release), and author’s calculations.
[Inflation adjusted] Personal income excluding transfers and industrial production are falling in October, even as employment rises in November.
The trajectories of the BLS vs. ADP private nonfarm employment series differ, even though for much of the year, the ADP series was above that of BLS.
Figure 1: Manufacturing employment, in 000’s, s.a., from BLS (blue), and from ADP (brown), on log scale. Light green shading denotes data that will be benchmark-revised in February release. Source: BLS and ADP via FRED. [Updated 12/7 to include November BLS data]
Manufacturing peaked a little earlier in the ADP data (June) vs. BLS (August), but ADP suggests a much less pronounced rise to peak during 2019.
National manufacturing employment peaks nearly a year later, August 2019.
As noted by Jim. Over the last week, we’ve received new readings on employment, income, sales, and monthly GDP:
The contrast with national manufacturing employment (total, not just production and nonsupervisory, which is declining).