According to the National Association of Manufacturers (NAM), manufacturing employment remained under pressure at the end of the year, reinforcing a labor market pattern that has become familiar across much of the sector. In December, manufacturing employment declined by 8,000 jobs, marking the eighth consecutive month of losses, following a drop of 2,000 jobs in November. By comparison, total nonfarm payroll employment edged up by 50,000 in December after a 56,000-job increase the prior month. Following the government shutdown, overall employment remains down by 67,000 jobs from September levels.
Despite the continued softness, the unemployment rate ticked down slightly, falling 0.1 percentage point to 4.4 percent in December. The labor force participation rate also dipped by 0.1 percentage point to 62.4 percent. Excluding the impact of the government shutdown, private payrolls have risen by a cumulative 88,000 jobs since September. Over that same period, manufacturing employment has declined by 19,000 jobs, underscoring the uneven nature of the labor market and the impact on manufacturing.
Job openings data further reflects the cautious approach many manufacturers continue to take. Manufacturing job openings fell by 11,000 to 403,000 in November. The manufacturing job openings rate declined to 3.1 percent, down from 3.2 percent in October and 3.4 percent one year earlier. Hiring activity also slowed, with the hires rate slipping 0.2 percentage points to 2.3 percent. Meanwhile, the separations rate, which includes quits, layoffs, and discharges, held steady at 2.5 percent.
Together, these figures point to a labor market defined less by layoffs and more by restraint. Job openings remain well below the roughly 500,000 level that averaged through much of 2024, yet turnover remains low. Most manufacturers appear focused on holding onto their existing workforce while limiting new hiring. The continued decline in the hires rate, now approaching its 10-year low of 2.1 percent, suggests that employment levels are being reduced primarily through attrition rather than active workforce cuts.
Manufacturing activity data paints a similarly mixed picture. The ISM Manufacturing PMI contracted for the tenth consecutive month in December, falling to 47.9 percent from 48.2 percent in November and remaining below the 50 percent threshold that signals expansion. While overall activity weakened, several demand-related indicators showed improvement. The New Orders Index rose to 47.7 percent, New Export Orders increased to 46.8 percent, and the Backlog of Orders Index climbed to 45.8 percent.
While the improvement in demand indicators offers some encouragement, activity remains firmly in contraction territory. For now, the data suggests manufacturers continue to operate in a cautious environment, balancing workforce stability with subdued activity and limited hiring.
