Manufacturing Activity Grew in August, But Factory Jobs Contracted for 13th Straight Month

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The road to recovery remains long for U.S. factory workers.

The Institute for Supply Management (ISM) reported Tuesday that manufacturing activity rose to 56% in August, up from 54.2 in July, based on the ISM’s survey of purchasing and supply executives nationwide.

August’s report qualifies as the highest manufacturing activity since January 2019, and signals that U.S. manufacturing has grown for a third consecutive month with consumer demand expanding.

But don’t break out the champagne quite yet.

While manufacturing activity has increased faster than expected, the ISM also reports that manufacturing employment remained in contraction for the 13th straight month, despite some improvement from July’s report.

Though the ISM’s report sponsors hope that manufacturing will continue its recovery, there’s a long and difficult road ahead.

August’s manufacturing gains are extremely limited when held in comparison to the losses factories have seen since the beginning of 2019, especially in terms of employment. The U.S. Bureau of Labor Statistics’ July jobs report revealed that manufacturing gained only 26,000 jobs that month, leaving 740,000 factory workers unemployed since February.

Meanwhile, China continues to leverage its lead in recovery from the COVID-19 pandemic and is positioning itself to cement its status as the world’s manufacturing powerhouse. This July, the country’s exports surged to a record high, aided by strong financial support from its authortarian regime, along with an artificially weak currency.

In the United States, the pandemic is likely to continue to complicate manufacturing’s recovery, and the federal government has done little to offer the remedies that would help stabilize the sector. Momentum in infrastructure investment stalled yet again earlier this summer, with little hope for action soon.

As the Alliance for American Manufacturing outlined in a letter to Congress this July, America’s larger economic recovery must include a national industrial policy with significant investment in infrastructure and expanded Buy America coverage, among other strategies.

Though we’re eager for some positive news these days, the ISM’s largely optimistic report should come with a major grain of salt. Hundreds of thousands of America’s factory workers remain unemployed and future COVID-19 outbreaks, which seem almost certain to emerge, threaten the stability of manufacturing jobs that have recovered since the start of the pandemic.

We’re keeping an eye on metrics that offer perspective on manufacturing’s trajectory, including the upcoming jobs report from the Bureau of Labor Statistics, which is set to be released on Friday. But these jobs numbers often fail to capture the bigger picture: Workers are still suffering.