Rex Nutting on MarketWatch offers this opinion: The jobs report shows a spike in auto jobs — and that doesn’t pass the smell test.
Motor Vehicle Production
Auto Hiring
Manufacturing payrolls increased by 36,000 in August, three times as many as usual, and matching the highest monthly gain in four years. Better yet, the number of production workers (counting only those directly engaged in production and excluding back-office and support personnel) increased by 50,000, the highest in nearly 20 years.
Hiring was particularly strong in the motor-vehicle sector, where employment rose by 13,700 on a seasonally adjusted basis, the most since February 2014.
August is always the strongest month for hiring in autos, as the plants resume full-scale production after a summer lull for retooling. On a not-seasonally adjusted basis, hiring in autos was 30,000 in August, the best since 2013.
But what doesn’t fit is the hiring spike in motor vehicles. Car and truck production has been trending lower, and inventories of unsold vehicles are high. Most of the auto makers have announced they will reduce production in the second half of the year in order to work down those inventories. Those production schedules could be upgraded now that hundreds of thousands of vehicles in the Houston area will need to be replaced, but the hurricane wasn’t on anyone’s mind in mid-August when the jobs survey was taken.
Auto sales have fallen in 11 of the past 12 months, and have dropped seven months in a row. Sales in August, which are being reported on Friday, were expected to show a slight increase — at least that was the assumption before Hurricane Harvey knocked out sales for several days in the fourth largest market in America.
If production and sales are trending lower, hiring more workers doesn’t make sense. And yet that is what the Bureau of Labor Statistics reported for August, based on its survey of businesses. Most likely, the data showing a spike in hiring is simply noise. It didn’t happen, and will probably be revised away.
Another Look at the Data
This seemingly makes little sense. But is it possible? I like to download the data myself. I could not find it on Fred, but I could find the data on the BLS website. Here are a couple of charts I produced.
Motor Vehicle Employment
Kudos to the productivity of motor vehicle workers producing record numbers of vehicles with far fewer employees than in 2007.
Change in Motor Vehicle Employment 2007-Present
Starting August 2009, the entire chart looks like random noise.
Change in Motor Vehicle Employment August 2009-Present
Does that hiring pass the smell test? It’s certainly possible. There was a long period of little or negative hiring with two years of record production.
Why hire now? What about coming changes in electrical vehicles and self-driving vehicles? Is all the hiring for the production line or something else?
I am not saying that is what’s happening but it could be. It could also be random noise.
Regardless, looking back beyond 2012 provides quite a bit of perspective the MarketWatch article missed.
Mike “Mish” Shedlock
I wish someone at the BLS who reads this blog would confess his sins here.
August to August job growth Payroll Data NSA:
2017 2,100,000 oops, a slow down
2016 2,502,000
2015 2,814,000
2014 2,636,000
2013 2,314,000
2012 2,285,000
August to August job growth Household survey NSA:
2017 1,772,000 oops, a slow down
2016 2,576,000
2015 2,581,000
2014 2,138,000
2013 1,951,000
2012 2,223,000
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mish,
one needs to factor in retirements,
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What was Tesla’s hiring for the period? They are ramping up the gigafactory and would account for a lot of production hiring in the last few months.
Also, Subaru in my state, Indiana, is adding something like 2000 as part of its current expansion. Subaru also is near the bottom in incentives per vehicle.
The big boys might be suffering, but auto manufacturing has some bright spots that do not show up in the headline sales numbers.
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What about replacing the fleet of Houston cars going forward. Will that subtract from insurance and add to auto significantly ? Will financed cars be a loss for lenders ? Will the missing cars be replaced with ones from the ballooning inventory of used and lease returns from outside Texas ?
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Sorry – didn’t see the related post on this topic discussing these questions.
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I wonder if they count YouTubers with car shows and automotive bloggers in that survey?
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Its the last effort for channel stuffing.
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August to August occupation growing Payroll Data NSA:
2017 2,100,000 oops, a obtuse down
2016 2,502,000
2015 2,814,000
2014 2,636,000
2013 2,314,000
2012 2,285,000
August to August occupation growing Household survey NSA:
2017 1,772,000 oops, a obtuse down
2016 2,576,000
2015 2,581,000
2014 2,138,000
2013 1,951,000
2012 2,223,000 What was Tesla’s hiring for the full stop?
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