Meet the Author

Peter Rupert |

Senior Research Advisor

Peter Rupert

Peter Rupert was formerly senior economic advisor in the Research Department at the Federal Reserve Bank of Cleveland. His areas of specialization include labor economics and applied econometrics.

06.07.07

Economic Trends

Manufacturing Employment

By Peter Rupert and Cara Stepanczuk

The goods-producing industry lost 19,000 jobs in May, which was traced to weakness in durable goods manufacturing. The motor vehicles and parts sector, which employs 7 percent of all manufacturing workers, was responsible for 10,000 job cuts alone.

Compared to other sectors in the manufacturing industry, motor vehicles and parts has been the most volatile over the last 12 months. It has distinguished itself even among the five weakest sectors (motor vehicles and parts, paper products, textile mills, furniture, and wood products) as the largest contributor to recent job losses. In fact, from May 2006 through May 2007, motor vehicles and parts shed a total of 76,400 jobs (46.6 percent of the decline in manufacturing employment); the remaining sectors in the manufacturing industry—which account for about 93 percent of the industry—lost just 87,600 jobs combined.

Comparing the employment trends in total manufacturing and manufacturing without motor vehicles and parts reveals the impact of the most troublesome category. Without the weight of the losses in motor vehicles and parts, manufacturing payrolls would have been slightly elevated in the last year.

Employment in the motor vehicles and parts sector dropped sharply at the turn of the century and has been steadily declining since the start of the last recession. While total civilian employment reached its pre-recession employment level after 47 months, employment in motor vehicles and parts—as well as manufacturing as a whole—has not yet reached the bottom of its employment trough. Motor vehicles and parts employment held up overall manufacturing employment until the end of last year (70 months after the start of the recession). The recent downturn in motor vehicles and parts employment has started to drag on manufacturing, and manufacturing excluding automobiles has fared better than manufacturing as a whole in the last five months.