New orders for manufactured goods rose 1.4 percent to a record $544.2 billion in January, according to Chad Moutray, Ph.D. and Chief Economist at the National Association of Manufacturers (NAM). Excluding transportation equipment, manufacturing orders rose 1.0 percent in January, also an all-time high. Overall, the manufacturing sector continued to expand strongly—despite supply chain, workforce and pricing pressures—with new orders soaring 13.6 percent year-over-year.
The ISM Manufacturing Purchasing Managers’ Index rose from 57.6 in January to 58.6 in February, led by strength in new orders, which grew at the fastest pace in five months. Cost pressures continued to be highly elevated, but with the index for prices declining from 76.1 in January to 75.6 in February. Wait times for deliveries continued to be very long.
Private manufacturing construction spending jumped 8.5 percent to a record $92.86 billion in January, soaring 31.2 percent over the past 12 months. These data speak to the strength of the manufacturing sector and the need to increase capacity to meet very robust demand.
Manufacturing activity strengthened in the Dallas Federal Reserve Bank’s survey, with the composite index of general business conditions rising from 2.0 in January to 14.0 in February, the best reading since October. Survey respondents predicted that wages over the next six months would increase at a record pace.
Manufacturing employment rose by 36,000 in February, with robust hiring in the sector despite sizable ongoing challenges. The manufacturing sector added 365,000 workers in calendar year 2021, the most since 1994. In the first two months of 2022, the sector hired 52,000 employees, bringing the total number of employees to 12,607,000 in February 2022. With that said, there remained 178,000 fewer manufacturing employees relative to pre-pandemic levels.
The average hourly earnings of production and nonsupervisory workers in manufacturing rose to $24.54 in February, up 4.9 percent from one year ago and remaining very elevated.
New orders for core capital goods—a proxy for capital spending in the U.S. economy—rose 1.0 percent to a record $80.1 billion in January. Core capital goods orders increased a solid 10.7 percent year-over-year. Meanwhile, factory shipments increased 1.2 percent to $536.9 billion in January, an all-time high.