Job Gains at U.S. Factories Show Manufacturers Are Driving the Expansion

American factories added the most jobs in a year as they stayed at the forefront of the expansion, boosting employment opportunities in the rest of the economy.

Manufacturing payrolls increased 50,000 last month, exceeding the most optimistic forecast in a Bloomberg News survey and capping the largest two-year gain since 1985, Labor Department figures released today showed. Total employment across the economy jumped 243,000 in January as the jobless rate unexpectedly dropped to 8.3 percent.

“Most companies that I talk to are increasing, even if just a little, with one or two employees,” Rachael Lewington, owner of a Premier Placements, a manufacturing staffing firm based in Cooper City, Florida, said today in a telephone interview. “Positions that have been put on hold have become available. I’m getting a lot of calls with regard to sales people. That’s an indicator that they see growth.”

The gains at producers may continue as factory employees last month put in their longest workweek in 14 years, while overtime jumped to the highest since March 2007. Inventory rebuilding at the end of 2011 is driving orders at the same time companies replace equipment and demand for automobiles rises.

The number of factory workers in January climbed to 11.9 million, the most since May 2009. Assembly-line workers put in an average 41.9 hours of work each week last month, compared with 34.5 for all U.S. workers.

The median estimate for January factory payrolls called for a 12,000 gain, and projections of 23 economists surveyed by Bloomberg ranged tom 9,000 to 25,000.

Industrial Production

John Ryding at RDQ Economics is among those who said the increase in factory hours “points to a very robust industrial production report for January.” The Federal Reserve releases figures on output at factories, mines and utilities on Feb. 15. December production at factories climbed 0.9 percent, the most in a year.

“For at least the last three weeks, we’ve felt very good about the demand,” Thomas Kadien, senior vice president of consumer packaging at Memphis, Tennessee-based International Paper Co. (IP), the world’s largest maker of corrugated packaging, said yesterday on a conference call. “For at least the last three weeks, we’ve felt very good about the demand. From a North American perspective, the softness is behind us, and we feel much better about the first quarter.”

Since reaching a post-World War II low of 11.46 million at the start of 2010, manufacturers have added 404,000 workers to their payrolls.

More Hiring

“With hours extending, productivity could cool off a bit in manufacturing and that would beget more hiring,” said John Herrmann, president of Summit, New Jersey-based Herrmann Forecasting LLC. “That would be a very strong signal for the underlying economy.”

Peoria, Illinois-based Caterpillar Inc. (CAT), the world’s biggest maker of earthmoving equipment, plans to hire more workers this year as it expands facilities, including in Victoria, Texas, and Winston-Salem, North Carolina, Chief Financial Officer Edward Rapp said yesterday.

“Those are the things that will lead to employment growth here,” Rapp said in an interview with Betty Liu on Bloomberg Television’s “In the Loop.”

Cars and light trucks sold at a 14.1 million annual rate last month, according to industry data. Excluding a surge in August 2009 that reflected the government’s “cars-for- clunkers” program, it was the strongest month since May 2008.

The increase in overall payrolls was broad-based, with construction, temporary help agencies, accounting firms, restaurants and retailers stepping up hiring along with factories. The 8.3 percent unemployment rate is the lowest since February 2009.

To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz in Washington at cwellisz@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.