US manufacturing sector may take six years to recover - group

06 August 2010 21:09  [Source: ICIS news]

WASHINGTON (ICIS)--Recovery in the crucial US manufacturing sector is slowing down and may take six years to return to employment levels last seen before the recession began in late 2007, a major manufacturing group said on Friday.

The National Association of Manufacturers (NAM) said that the US Department of Labor (DOL) employment report issued earlier on Friday indicates that “the jobs market continues to weaken as does our economic recovery”.

The department reported that the US had a net job loss of 131,000 in July and the nation’s unemployment rate remains at 9.5%. The federal jobs report also showed a loss of workers in the chemicals sector but an employment gain in plastics.

NAM chief economist David Huether said that while the July jobs report did show a gain of 36,000 jobs in manufacturing, most of those were due to seasonal hiring in the automobile sector.

“But changes in most other manufacturing industries were negligible last month, which shows that the manufacturing recovery is slowing down,” Huether said.

“While manufacturing has added 26,000 jobs per month so far this year, this is still just a small fraction of the 91,000 jobs lost per month during the prior two years,” he added.

“If this pace is maintained, US manufacturing employment will not return to its pre-recession level for another six years,” Huether said.

The 14,000 member companies in the National Association of Manufacturers includes a number of chemical makers, plastics producers and applications firms.

Along with the US new home construction, manufacturing industries constitute a key downstream consuming sector for chemicals.

“The labour market over the past few months has clearly worsened,” Huether said, “with private sector job growth falling 67% in the May-July period compared with the three months ending in April.”

“This is a worrisome sign that employers’ confidence in the underlying strength of the recovery is tepid,” he said.

Huether said that the continuing high unemployment rate of 9.5% “will likely weigh on consumer confidence and spending in the near term”.

As consumer spending is the principal driving force of the US economy - accounting for as much as 70% of all production and commercial activity - Huether said that employers also are likely to hold back on expansion or new hiring.

“Today’s news shows little evidence that the labour market will significantly improve in the next couple of months,” he said.

The American Chemistry Council (ACC) also said that private sector jobs growth last month can at best be termed “tepid”.

“Today’s jobs report was worse than expectations and disappointing,” the council’s economics department said. “The recovery of jobs will take a very long time.”

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By: Joe Kamalick
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