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Record US Manufacturing Spending Struggles To Translate Into Jobs — New Data Signals Worsening Trend | Finks AI

Quality control has become damage control for the once-booming US manufacturing sector. Despite a record $19.7B invested into US manufacturing facilities in June — an 18.6% increase from last year and nearly 100% from June 2022 — job growth has been minimal, and the problem has recently intensified.

Factories collecting dust: In July, the manufacturing sector contracted for the fourth consecutive month, with a steeper decline than in previous months. Data from the Commerce Department’s Census Bureau released last Friday showed factory orders fell 3.3% in June, exceeding economists’ forecasts.

Companies are feeling the squeeze from elevated interest rates, rising costs, weak demand, and a strong dollar — while uncertainty ahead of the presidential election is also delaying major investments.
According to Timothy Fiore, Chair of ISM’s Manufacturing Business Survey Committee, interest rate uncertainty is the “most significant factor” holding companies back — stating, “We are entering into a deeper slowdown period as demand remains elusive.”

The Manufacturing Boom That Wasn’t

No matter where you look, manufacturers are struggling with tough market conditions. Deere & Co., the world’s largest farm equipment maker, has cut 15% of its hourly workforce since November. Appliances manufacturer Whirlpool cited a soft housing market for weak demand — while recreational vehicle maker Polaris reported a 49% drop in quarterly income.

Earlier this year, Rivian paused the construction of its $5B Georgia plant over slowing electric vehicle (EV) sales — while Ford ($F) and General Motors have also pulled back on their EV investments.
TSMC also delayed plans for its Arizona chip facility, part of a $40B investment — which followed Samsung’s decision to push back the timeline on its $17B chip plant in Texas in December.

And the jobs that didn’t follow: US manufacturing spending soared to record levels in recent years, rising 63% in 2023, the most significant increase over 70 years. Despite this record spending, the manufacturing sector added only a net 23K jobs between Jan. 2023 and Jan. 2024. And those numbers have worsened in recent months, with US manufacturing job openings falling by 100K in June compared to the previous month.

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Record US Manufacturing Spending Struggles To Translate Into Jobs — New Data Signals Worsening Trend

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The Manufacturing Boom That Wasn’t