The job market has been pretty decent lately unless you’re in the business of making things—and that could be a bad sign for the trajectory of the economy.
Manufacturing jobs in the U.S. have started to dry up over the past year, even as the overall labor market has expanded. In November, 12.9 million people worked in the manufacturing sector, down from 13 million in January 2024. Other measures of how well the nation’s factories, such as the Institute of Supply Management’s survey of purchasing managers, have been stuck in negative territory for months.
Manufacturing Jobs: Canary In The Coal Mine?
Although the job decline is just half a percentage point, the trend is prominent enough that at least one economist sees it as a warning sign for the economy’s overall health. Combined with struggles in the housing market, the decline suggests construction employment could be headed for a rough patch as well.
The broader job market has continued to add jobs over the past year, but economists at Pantheon Macroeconomics pointed out in a commentary that declines in manufacturing and construction jobs have often preceded economic downturns.
“We think the economy is in a more fragile position than markets and the commentariat appreciate,” Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics, wrote in a commentary along with Oliver Allen, senior U.S. economist at the firm.
Why are manufacturing and homebuilding struggling? The economists pointed the finger at the Federal Reserve’s policy of keeping the Fed funds rate at a two-decade high for more than a year leading up to September. While the central bank has eased interest rates since then, it may not be enough to get manufacturing jobs back on track, another economist said.
