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February 01, 2019

Strong Jobs & Manufacturing Gains Signal Strength For US Economy

It’s positive news for the promotional products industry, which tends to trend the way of GDP.

By  Christopher Ruvo

Government shutdown. Trade war with China. Stock market volatility.

Whatever, said American employers and manufacturers in January.

Last month, the U.S. economy added 304,000 jobs, smashing consensus expectations of 165,000 and far outpacing the 222,000 positions put on the books in December, according to the Bureau of Labor Statistics (BLS). January marked the 100th straight month of payroll growth – a gain that occurred despite the (since-ended) partial shutdown of the federal government. “For now, it looks like we are back in a sweet spot of strong economic fundamentals,” said Mike Loewengart, VP of investment strategy for E-Trade Financial Corporation, in a report from YAHOO! Finance.

Promotional products firms were among the companies that had a strong January and are hiring or looking to hire. Howard Potter, CEO of New York-based A&P Master Images (asi/102019), told Counselor that sales at his distributorship were up about 20% for the month. “We are actually looking at hiring another designer by March at the latest, as well as an accounts payable position,” Potter said.

Meanwhile, the U.S. manufacturing sector got in on the good news, too. The Institute for Supply Management’s closely-watched Purchasing Managers Index registered 56.6 for January. That’s 2.3 percentage points better than December. Readings above 50 indicate the sector is expanding.

Of the 18 manufacturing industries, 14 reported growth in January. “Comments from (manufacturers) reflect continued expanding business strength, supported by strong demand and output,” said Timothy R. Fiore, chair of ISM’s manufacturing survey committee. It wasn’t all roses, though. “The manufacturing sector continues to expand, reversing December’s weak expansion, but inputs and prices indicate fundamental changes in supply chain constraints,” said Fiore.

Despite trade tensions with China, U.S. manufacturers added 13,000 jobs in January, according to BLS. Other industries that were keen on hiring included leisure and hospitality, with 74,000 jobs added; construction (52,000); healthcare, (45,000); professional and business services (30,000); and retail (21,000).

Meanwhile, the percentage of Americans working or looking for work rose to its highest level since September 2013, coming in at 63.2% in January. Wages ticked up last month too, increasing by three cents per hour to $27.56. By late 2019, the average annual hourly pay rate could increase by 3.5% year-over-year, according to analysts. The unemployment rate rose to 4%, but that was primarily a result of temporarily laid off government workers and the greater labor force participation rate.

“The economy is stronger than the news media is reporting,” Bob Herzog, CEO of Top 40 distributor Corporate Imaging Concepts (asi/168962), told Counselor.