The gears of the manufacturing labor market are grinding to an even slower pace in 2023, according to PMMI Business Intelligence’s 2023 report “Guidance in an Uncertain Economy: Gauging the Risks Going Forward 2023-2024.”
The rate of change in manufacturing hourly earnings remains high at 4.1%. It is taking a downward turn in 2023, though, which signifies a disinflation mode, the report says, citing research from ITR Economics.
Historically, 4.1% is a high rate, and the current average earnings of $31.3 per hour will keep climbing. The disinflation in the rate of change will affect the speed at which those earnings climb.
State of Employment: Manufacturing and Overall
Manufacturing employment numbers are high at about 12,917,000 as of this report’s June 2023 publication, with a milder-than-average Q4 seasonal decline in employment.
Job openings within the industry are shrinking, too, with a three-month moving average of 696,000 openings. That’s the lowest number of openings in 23 months, but it’s still over double the average of 320,000 openings between 2010 and 2019.
Overall, private sector employment is also strong, with a record high of 131.4 million over a 12-month moving average. The number of people unemployed is also at its lowest point in 21-plus years, at a 12-month moving average of about 5.9 million.
The current employment-population ratio is at 60%. That’s higher than we saw for the decade before COVID (59.3%) and slightly below what we had at its peak in November 2019 (61.1%).
The economy grew faster than the workforce, creating the need for more people. The Federal Reserve Board cannot fix this, so wage inflation, and in turn, overall inflation will be with us for the rest of this decade.
Source: PMMI Business Intelligence “2023 Guidance in an Uncertain Economy: Gauging the Risks Going Forward 2023-2024.”
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