Employers added 224,000 jobs in June, according to the U.S. Bureau of Labor Statistics, more than most economists expected. The nation’s unemployment rate was 3.7%, remaining at historic lows.
The manufacturing sector saw 17,000 jobs added after four months of flat activity. This followed a strong run of an average of 22,000 manufacturing jobs added every month in 2018 and 15,800 per month in 2017. Those gains followed two weak years that saw 7,000 manufacturing jobs lost in 2016 and only 5,800 per month added in 2015.
In the last 30 months of President Obama’s term, manufacturing employment grew by 185,000 or 1.5%. In President Trump’s first 30 months, manufacturers added 499,000 jobs, expanding by 4.0%. In the same 30-month time span during the mature, post-recovery phase of the business cycle, some 314,000 more manufacturing jobs were added under Trump than under Obama, a 170% advantage.
Some have attributed the recent soft patch in manufacturing growth to ongoing trade tensions, especially with the People’s Republic of China, as the Trump administration seeks to remedy longstanding concerns regarding intellectual property theft and non-tariff barriers that discourage China’s importation of key American goods.
With the likely final approval of the United States-Mexico-Canada Agreement (USMCA), the largest trade deal in history, China-linked supply chains may see some reordering, shifting back across the Pacific to North America. Mexico and Canada enjoy proximity and a cultural familiarity with the U.S. that China cannot replicate. But while China formerly attracted investment and interest in its vast markets, these advantages have faded rapidly as the Chinese Communist Party has reasserted control after two decades of vigorous economic growth, heightening concerns regarding rule of law, earnings repatriation, and intellectual property rights.
Manufacturing job growth at the state level has been uneven, with state tax, labor, regulatory and energy policy being significant factors in manufacturing activity.
Since President Trump’s election in November 2016, Nevada has seen the most vigorous growth in manufacturing, adding 32.9% more jobs through May 2019 on a seasonally adjusted basis. Nevada is a low-tax state with no state income tax. Its neighbor to the west, California, has the highest marginal income tax rate in the nation, 13.3%, and one of the highest business tax burdens in the nation as well as high energy prices due to the state’s mounting campaign against greenhouse gas emissions. A significant share of Nevada’s manufacturing success comes at the expense of California, one of the bottom 10 states for manufacturing with an anemic 2% payroll growth over the same period.
The rest of the top ten is rounded out by Wyoming, 12.0%; South Dakota, 10.0%; Arizona, 9.9%; Idaho, 9.5%; Utah, 8.7%; North Dakota, 8.6%; South Carolina; 8.1%; Texas, 7.4%; and, Iowa, 7.2%.
The ten states with the most sluggish or negative manufacturing employment growth are: Alaska, -5.3%; Hawaii, -2.8%; Rhode Island, -2.5%; New York, -1.3%; Massachusetts, -0.5%; Minnesota, 0.8%; Pennsylvania, 0.9%; Maryland, 1.6%; California, 2.0%; and Montana, 2.0%.
The Northeast’s weak manufacturing climate is especially interesting in light of New York Gov. Andrew Cuomo’s fight against the use of clean and affordable American-made natural gas, with needed pipeline projects being halted. Both industry and residential customers now find securing enough gas to be a challenge. On top of New York’s high taxes, Cuomo’s environmental virtue-signaling appears to be scaring sorely needed manufacturing jobs out of state.