Factory Job Losses Send New Warning Signal to Trump on Trade War
The figures are the latest indication of the hit factories are taking amid slowing growth globally and the trade war with China.
(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here.
President Donald Trump lauded a tight labor market Friday as the unemployment rate hit a 50-year low. He didn’t mention job losses appearing in manufacturing, a key industry for his base of supporters.
Total payrolls at factories contracted by about 2,000 in September, when economists had expected a 3,000 gain. The data was released as part of the monthly jobs report Friday, which this time happened to fall on Manufacturing Day, the industry’s unofficial holiday.
The figures are the latest indication of the hit factories are taking amid slowing growth globally and the ongoing trade war with China, which not only increases prices for companies but also causes investment uncertainty.
The monthly decline in factory jobs was the second this year, and comes after gains throughout the tail-end of 2017 and all of last year. Companies added about half a million manufacturing jobs since Trump took office in January 2017, continuing a trend of sector growth since the 2008-2009 financial crisis.
While the number of losses is still far off from the cuts workers faced during that downturn, it doesn’t bode well for an industry the president promised to revive.
It’s just the latest crack in the industry, which slipped into a recession this year. One major gauge showed manufacturing contracted for the second straight month to the lowest level since 2016, with employment being one of the laggards. Capital equipment orders -- a proxy for investment -- rose at the weakest pace in four months in August, the most recent data show, indicating goods-producers taking a step back.
Boston Federal Reserve President Eric Rosengren said Friday expectations for weaker exports and manufacturing are being realized. Regionally, the job losses in manufacturing have impacted key states for Trump in the 2020 presidential election: Pennsylvania and Wisconsin. Those two swing states lost the most jobs in the sector in the past year.
Trump campaigned in 2016 on a message to strengthen U.S. factories and the average worker. But his presidency has coincided with declining growth for countries globally, including some of the largest trading partners, and his tariffs on metals and billions of dollars in Chinese goods have swung import-export data and business investment decisions.
The president was bullish on the jobs report Friday.
“The unemployment numbers just came out, and they’re the best numbers we’ve had in over 50 years,” Trump told reporters. “Wages are up by almost 3%, that’s a fantastic increase for everybody out there working. We’re very happy about those numbers.”
Wage growth is a silver lining for factory workers. They saw a tick up in pay, something not all sectors experienced.
--With assistance from Jeff Kearns.
To contact the reporter on this story: Katia Dmitrieva in Washington at edmitrieva1@bloomberg.net
To contact the editors responsible for this story: Scott Lanman at slanman@bloomberg.net, Margaret Collins, Sarah McGregor
©2019 Bloomberg L.P.