The Automatic Data Processing (ADP) report released this morning found that 133,000 net new jobs were added to the economy in May. This is slightly higher than the revised increase of 119,000 in April. Almost all of these gains stemmed from the service sector. Mirroring past reports, all but 9,000 of the net increase came from small and medium-sized businesses (e.g., those with less than 500 employees).

Reflecting recent weaknesses, manufacturers shed 2,000 workers. This was the second consecutive decline, with a 6,000 worker decrease observed in March. Still, even with these losses, the year-to-date gain is 55,000. Note that ADP’s estimates are lower than the official data from BLS, with 167,000 net new jobs added to the sector in the past five months.

Tomorrow, the Bureau of Labor Statistics will release the latest government statistics on employment. Last month, manufacturers added 20,000 workers in April. I would expect the increase to be lower than in April, but we will have to see if BLS finds a decline as well.

Chad Moutray is chief economist, National Association of Manufacturers.

Yesterday BP announced that it has reached a $400 million settlement with the Environmental Protection Agency (EPA), the Department of Justice and others that will allow the company to modernize its Whiting, Indiana refinery.  BP had been embroiled in multi-year negotiations for a permit for the project, the largest private-sector investment in Indiana history.  By finding a way to move forward, BP estimates it will be able to create 10,000 jobs just this year.

Ross Eisenberg is vice president of energy and resources policy, National Association of Manufacturers.

Today’s Wall Street Journal article, “Once Made in China: Jobs Trickle Back to U.S. Plants”, detailed the growing “reshoring” trend in manufacturing as more and more companies are deciding to bring facilitates and jobs back from overseas. This trend is another indicator of the positive manufacturing activity we’ve seen over the past several months.

The article highlighted several manufacturers that have collectively created a few thousand positions here in the U.S. as a result of returning certain work.

“U.S. manufacturing has become attractive for some companies as Asian wages have surged over recent years and the wage gap between the U.S. and China has narrowed. The drop in the dollar over the past decade has also made U.S.-produced goods more competitive. And higher oil prices have increased the cost of shipping goods across oceans, making domestic manufacturing more appealing.”

Even with these positive indicators, manufacturers are still finding that it is 20 percent more expensive to do business in the U.S. compared to our major trading partners. Companies are deciding on a case-by-case basis where it makes more financial sense for them to manufacture.

Manufacturers have added 167,000 net new jobs over just the past five months and 489,000 since January 2010. But we must do more. We need polices to help level the playing field to enable manufacturers to export more. We need a predictable and consistent tax code, an “all of the above” energy strategy, and a highly skilled workforce. These are just some policy changes that will help keep manufacturers in the U.S competitive, allowing them to grow and create new jobs.

Today Alcoa celebrated the groundbreaking of construction for its new $90 million aluminum lithium facility in Lafayette, IN. Alcoa is the world’s leading producer of primary and fabricated aluminum.

The new state-of-the-art facility will be an 115,000 square foot expansion capable of producing more than 20,000 metric tons of aluminum lithium. The new facility will create approximately 75 high-value jobs, with an additional 150 jobs created during the construction.

Alcoa’s decision to invest in a new facility is a perfect example of how manufacturers are leading innovation here in the United States. Manufacturers are driving our economic recovery and it’s great to see manufacturers continue to expand and create new jobs.

What manufacturers need now is more pro-growth policies from Washington that will allow companies to invest in new facilities such as this and employ more workers.  We need more stories like today’s groundbreaking of Alcoa’s new facility. Such projects will ensure that the U.S. remains competitive in the global manufacturing economy.

With fewer economic data points released last week, attention turned to the situation in Greece. Even with new austerity measures and debt restructuring plans, worries abound about the possibility of default and, more importantly, the larger implications for the entire Eurozone. Equity markets around the world reflect these anxieties about the European sovereign debt crisis. Manufacturers are closely following these developments, with nearly half of them in a recent survey suggesting that Europe’s challenges have impacted their sales. Indeed, manufactured goods exports have slowed recently in large part because of weakness in the European market.

Economic uncertainty also worries the American public. Despite improvements in recent employment and production numbers, the latest consumer confidence figures from the University of Michigan fell slightly on weakened perceptions about the current economic environment. A similar falloff in sentiment was observed in the most recent consumer survey from the Conference Board. Nonetheless, consumers are clearly more optimistic today than last fall, and they continue to spend, albeit more selectively than some might prefer. The challenge is that much of this spending has been with borrowers’ dollars. This was confirmed last week with the Federal Reserve’s report of a surge in additional indebtedness.

On a more positive note, manufacturers have stepped up hiring in the past couple of months. Job openings in December were up for both the manufacturing sector and the economy as a whole. There were 35,000 net new manufacturing hires in the month of December, an improvement from November’s 19,000. (Note that labor turnover data are reported with a lag, so the strong employment gains of January are not included in this analysis.) While employment levels remain well below where they should be, these numbers are obviously welcome news.

This week, we will learn more about recent manufacturing activity, with new industrial production figures and surveys from the Federal Reserve Banks in New York and Philadelphia. These reports are expected to show continued growth among manufacturers. In addition, the latest housing data are predicted to show additional residential construction in January, building off recent incremental gains. Finally, we will obtain the latest data on retail sales, inflation and small business sentiment.

Chad Moutray is Chief Economist, National Association of Manufacturers.

New Job Openings and Labor Turnover Survey (JOLTS) data from the Bureau of Labor Statistics show that manufacturing hiring was up in December, mirroring other employment data released by the agency. There were 264,000 job openings in the sector in December, up from 242,000 in November. The increase occurred in both the durable and nondurable goods sectors.

In addition, there were 261,000 hires and 226,000 separations in the month. This suggests net hiring of 35,000, an improvement from the 19,000 gain in November. This can be seen in the attached graphic.

For the macroeconomy as a whole, the number of job openings rose from 3,118,000 in November to 3,376,000 in December – an increase of 258,000. The hiring rate is currently 2.5 percent of the labor market, up from 2.3 percent in November. This brings it back to its level in September, right before the falloff in October in labor market activity. Despite the uptick, the hiring rate was little changed in December from November.

Given that these numbers overlap with strong improvements in U.S. employment in December and January, there is little new news here. The manufacturing jobs picture is improving, and yet, overall, hiring remains a challenge. With modest growth in production this year, we will hopefully see increased hiring in the coming months.

Chad Moutray is Chief Economist, National Association of Manufacturers.

Great news out of Illinois today! Chrysler has announced that it is hiring 1,800 new workers and stepping up production at their plant in Belvidere. It’s a good story that coincides with the news that the U.S. economy gained 50,000 manufacturing jobs in the last month.

Approximately 500 of the new employees will focus on the new Dodge Dart while others will work on existing models.  The new hires represent a 66% increase in plants workforce and all are expected to be hired by the third quarter this year.

Additionally, it is expected to create hundreds of other jobs at parts suppliers and other vendors – part of the ripple effect that NAM President Jay Timmons spoke about during his January “State of Manufacturing” speech in Cleveland. He told those in attendance that:

“For every dollar invested in manufacturing, $1.35 of indirect economic activity is generated – the highest multiplier effect of any economic sector, by far. And for every job created in the manufacturing sector, up to another three jobs are created elsewhere in the economy.”

The addition of these jobs are due in large part to a pro-growth business environment for Chrysler – part of the polices that NAM has said are essential to achieve a Manufacturing Renaissance. Hopefully policy makers are paying attention to the results.

U.S. employment numbers jumped significantly higher in January, according to the Bureau of Labor Statistics, with the unemployment rate dropping to 8.3 percent.  Moreover, nonfarm payrolls grew by 243,000, and manufacturers added 50,000 net new workers. These gains were greater than expected, and certainly, much higher than the estimates from ADP released two days ago. Consensus estimates had been for around 150,000 net new jobs with the unemployment rate remaining around 8.5 percent.

These numbers continue to affirm the rebound and importance of manufacturing to our economic recovery. There were 82,000 net new jobs created in the sector in the past two months. This is definitely a sign that manufacturers have picked up their activity of late. Moreover, manufacturers have added 287,000 of the 2,063,000 net new nonfarm payroll jobs generated in the last 13 months (since December 2010); this suggests that nearly 14 percent of all of the jobs generated in that time frame stemmed from manufacturing.

As I noted last month, though, we would be remiss without mentioning the fact that employment remains a significant challenge, even with today’s good news. The “real” unemployment rate – which includes discouraged and underemployed workers – is now 15.1 percent, down from 15.2 percent in December and 16.1 percent last year at this time.

There are currently 2.81 million Americans who are classified as “marginally attached to the labor force,” with 1.06 million being discouraged workers. This is up slightly from last month. (The civilian labor force also grew last month, from 240.58 million to 242.27 million.)

Looking specifically at the January 2012 figures, the bulk of the new jobs in manufacturing came from the durable goods sector, which was up 44,000 for the month. The largest gains came in fabricated metal products (up 10,900), machinery (up 10,500) and transportation equipment (up 10,300). Nondurable goods sector employment rose by 6,000 in January. In that sector, the strongest growth came in the chemicals (up 2,200), printing and related support services (up 1,700) and beverages and tobacco products (up 1,300) sectors.

The average workweek for manufacturers rose from 40.6 hours in December to 40.0 hours in January. The average amount of overtime edged slightly higher from 3.3 to 3.4 hours. Therefore, the average weekly earnings for manufacturing workers rose from $969.93 to $977.51.

Overall, these numbers show renewed strength in the domestic economy, with employment growth in almost every major industrial sector except information, financial services and government. It mirrors other recent economic indicators showing an uptick in activity since October. Moreover, several sentiment surveys suggest that manufacturers are optimistic about future production and employment in 2012, which should bode well for this year’s numbers.

Yet, it is important to remember that significant headwinds exist both in Europe and in the U.S. The labor and housing markets – while improving – still have a long way to go before they are healthy, and consumer and business optimism is mixed with persistent anxieties. Still, we will take good news when we can get it.

Chad Moutray is chief economist, National Association of Manufacturers.

Representative Henry Waxman’s (D-CA) political games on the Keystone XL pipeline project is only setting Americans back in their quest to find jobs — good paying jobs.  Continued attempts by the Ranking Member of the House Energy and Commerce committee to cause a distraction by focusing on whether or not certain companies stand to benefit from this project is deplorable.  Americans stand to benefit.  More than 20,000 jobs will be created in manufacturing and construction, not to mention the 118,000 spin-off jobs that will also be created.  Manufacturers use one-third of our nation’s energy supply and the construction of the pipeline will provide a new source of affordable energy to manufacturers.

So let’s stop playing games. Politicians can no longer claim the need to create jobs for Americans while simultaneously using their position to stand in the way of common sense projects that would do exactly that.  America is prosperous because the private-sector fuels our economy and creates jobs — this Keystone XL pipeline project is no different.

Jay Timmons is president and CEO, National Association of Manufacturers.

Manufacturers were well represented on Capitol Hill today as NAM Executive Committee member and Chair of the Small and Medium Manufacturers Group Kellie Johnson, President of Ace Clearwater Enterprises, testified on behalf of small businesses and manufacturers.

Kellie Johnson, NAM Board Member, testifies before the House Ed & Workforce Committee

The House Committee on Education & Workforce held their first hearing of 2012 entitled, “Expanding Opportunities for Job Creation”. Ms. Johnson was chosen to testify because of her insight into state initiatives for job creation, the effects of federal policies on job creation, and the challenges facing small businesses within the current economic environment.

While in front of the powerful House committee, Ms. Johnson highlighted the ways in which federal regulations burden small and medium manufacturers differently than their larger counterparts, specifically citing recent decisions and regulations from the National Labor Relations Board (NLRB), Occupational Safety and Health Administration (OSHA), and the Environmental Protection Agency (EPA).

She hammered home the point by stating, “The uncertainty of our regulatory and economic environments makes it almost impossible for short or long-term business growth, especially for a capital intensive industry like manufacturing. To be compliant with the newest regulations and rules takes time away from running the day-to-day operations of a business. Resources are constantly rerouted away from customers, resulting in lower productivity and lower customer satisfaction.”

Additionally, Ms. Johnson took the opportunity to speak about the impediments to job creation arising from regulatory overreach from the viewpoint of a small manufacturer was a chance to emphasize the importance of manufacturing to economic growth. To read her full testimony click here.