Transcript Slide 1

Oklahoma Conference on Manufacturing
October 9, 2013
Chad Wilkerson
Vice President, Economist, and Oklahoma City Branch Executive
Federal Reserve Bank of Kansas City
www.kansascityfed.org/oklahomacity
Federal Reserve Districts
and Office Locations
The U.S. Economy
and Manufacturing
U.S. GDP growth improved in Q2 2013
after slowing earlier with the fiscal cliff
Growth in Real GDP
6
Percent change from the previous period, SAAR
4.9
3.9
4
3.9
2.8
2
2
1.3
3.7
3.2
2.8
1.6
2.8
1.4
2.5
1.2
1.1
0.1
0
-0.4
-1.3
-2
-2
-4
-6
-5.4
-8
-8.3
-10
Q2 2008
Q4 2008
Q2 2009
Q4 2009
Q2 2010
Q4 2010
Q2 2011
Q4 2011
Q2 2012
Q4 2012
Q2 2013
Source: U.S. Bureau of Economic Analysis, Haver Analytics
But growth in U.S. factory output and
jobs slowed through the first half of 2013
U.S. Manufacturing Employment and Output
Percent change, year-over-year
Percent
10
10
5
5
0
0
-5
-5
Output
-10
-10
Employment
-15
-15
-20
-20
Qtr2
2003
Qtr2
2004
Qtr2
2005
Qtr2
2006
Qtr2
2007
Qtr2
2008
Qtr2
2009
Qtr2
2010
Qtr2
2011
Qtr2
2012
Qtr2
2013
Source: U.S. Bureau of Labor Statistics
Productivity growth remained moderate,
with compensation closely tracking it
U.S. Manufacturing Indicators
Percent change, year-over-year
10
Percent
10
8
8
6
6
4
4
2
2
0
0
-2
-2
Output/hour
Hourly compensation
-4
-4
-6
-6
Qtr2
2003
Qtr2
2004
Qtr2
2005
Qtr2
2006
Qtr2
2007
Qtr2
2008
Qtr2
2009
Qtr2
2010
Qtr2
2011
Qtr2
2012
Qtr2
2013
Source: U.S. Bureau of Labor Statistics
Q3 data suggest U.S. economic growth
picked up, including in manufacturing
U.S. Private Payroll Employment and Business Indexes
600
Change from previous month, thousands
Index
65
400
60
200
55
0
50
-200
45
-400
40
-600
35
Private Employment (left axis)
ISM Manufacturing Index (right axis)
-800
-1000
Sep-08
ISM Non-Manufacturing Index (right axis)
Sep-09
Sep-10
Sep-11
Sep-12
30
25
Sep-13
Source: Institute for Supply Management, Bureau of Labor Statistics
In its latest projections, the FOMC expected
unemployment to continue to improve
Unemployment Rate
Seasonally Adjusted
Percent
12
12
Sept. FOMC Forecast
Ranges in Yellow
10
Long
Term
10
8
8
6
6
4
4
2
2
0
0
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
Source: U.S. Bureau of Labor Statistics, FOMC
On interest rates, most FOMC participants
expect little change until 2015
Federal Funds Rate
Year-end target
12
Percent
12
10
10
8
Long
Term
6
8
6
Sept FOMC Forecast
Ranges in Yellow
(2)
4
(12
2
4
2
(3)
0
0
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
Note – Number of participants who project the initial
increase will occur in the specified year in parenthesis
Source: U.S. Bureau of Economic Analysis, FOMC
The Oklahoma Economy
and Manufacturing
Employment in Oklahoma remains above
pre-recession levels, but has eased lately
Level of Payroll Employment
Through August 2013
104
Index: Jan-08=100
104
102
102
Oklahoma
100
100
98
98
U.S.
96
96
94
94
92
Jan-08
92
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Source: U.S. Bureau of Labor Statistics
A drop in energy jobs has hurt the state this
year, but manufacturing jobs have held up
Employment Growth by Industry
August 2013
8
Percent change year-over-year
6
5.4
U.S.
4
2
3.0
2.8
1.8
1.7
OK
3.4
2.0
1.9
1.6
0.7
0.5
0.1
0.3
0.2
3.0
1.4
0.1
0
0.0
-0.1
-1.3
-2
-2.6
-4
-6
-8
-8.1
-10
Total
Hospitality Prof. &
Bus.
Services
Trade &
Transp.
Mfg.
State &
Local
Govt.
Fed. Govt
Edc. &
Health
Finance
Constr.
Energy
Source: Bureau of Labor Statistics
And unemployment rates in nearly all of
Oklahoma remain better than the U.S. rate
County Unemployment Rates
July 2013
Source: OK Employment Security Commission
Oklahoma manufacturing exports have
risen recently, more than the nation
Total Manufacturing Exports
Percent change, year-over-year
40
Percent
40
30
30
20
20
10
10
0
0
-10
-10
U.S.
OK
-20
-20
-30
-30
-40
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Source: WiserTrade
-40
Jul-13
Aircraft and machinery have driven the
rebound in Oklahoma exports this year
Manufacturing Exports by Industry
(Top 5 Oklahoma export industries)
Jul-12 YTD vs. Jul-13 YTD
20
Percent
15
10
5
0
-5
-10
U.S.
-15
OK
-20
-25
-30
Aircraft, Spacecraft,
and Parts
Electric Machinery Industrial Machinery,
Including Computers
Vehicles and Parts
Optic, Photo, Medical,
or Surgical
Instruments
Source: WiserTrade
Oklahoma’s exports to Europe have surged,
and exports to China have remained solid
Manufacturing Exports by Destination
(Top 5 Oklahoma export destinations)
Jul-12 YTD vs. Jul-13 YTD
20
Percent
15
10
5
0
-5
-10
U.S.
-15
OK
-20
-25
-30
Europe
China
Mexico
Canada
Source: WiserTrade
Japan
As in the nation, regional manufacturing
activity improved in the third quarter
Manufacturing Composite Indexes
Month-over-month, Seasonally Adjusted
65
Index
65
60
60
55
55
50
50
45
45
KC Fed
40
40
ISM
35
30
Sep-08
35
Sep-09
Sep-10
Sep-11
Sep-12
Source: FRB Kansas City
30
Sep-13
And expectations among regional plant
managers increased in September
Tenth Fed District Manufacturing Expectations
Six-month ahead, Seasonally Adjusted
50
Index
50
40
40
Production
30
30
20
20
10
10
Capital Spending
0
0
-10
-10
-20
-20
-30
-40
Sep-08
Employment
Sep-09
-30
Sep-10
Sep-11
Sep-12
Source: FRB Kansas City
-40
Sep-13
For most of the past decade, Oklahoma
factory jobs have grown faster than the U.S.
Manufacturing Employment
Percent change, year-over-year
10
Percent
10
5
5
0
0
-5
-5
U.S.
OK
-10
-10
-15
-15
-20
Aug-03
Aug-04
Aug-05
Aug-06
Aug-07
Aug-08
Aug-09
Aug-10
Aug-11
Aug-12
-20
Aug-13
Source: U.S. Bureau of Labor Statistics
Manufacturing’s share of employment in
Oklahoma is now similar to the nation
Manufacturing Share of Total Employment
12
Percent
12
11
11
10
10
9
9
U.S.
8
8
OK
7
6
Aug-03
7
Aug-04
Aug-05
Aug-06
Aug-07
Aug-08
Aug-09
Aug-10
Aug-11
Aug-12
6
Aug-13
Source: U.S. Bureau of Labor Statistics
Nearly all of the net job gains in the state
have been in machinery or primary metals
Oklahoma Manufacturing Employment by Industry
Change in number of jobs, 2002-2012
Machinery
Primary metal
Beverage & tobacco
Chemical
Elec. equip., appliance, & comp.
Petroleum
Paper
Fabricated metal
Nonmetallic mineral
Furniture
Misc.
Computer & electronic
Wood
Printing
Plastics & rubber
Food
Transportation equipment
-6000
-4000
-2000
0
2000
4000
6000
8000
Source: U.S. Bureau of Labor Statistics
Machinery, metals, petroleum, and mineral
manufacturing make the state most unique
Share of Manufacturing Output by Industry
2011
Industry
Petroleum & coal products
Machinery
Nonmetallic mineral products
Fabricated metal products
Paper
Plastics & rubber products
Food
Transportation equipment
Elec. equip., appliance, & components
Primary metal
Printing & related support activities
Miscellaneous
Beverage & tobacco products
Wood products
Chemical
Furniture & related products
Computer & electronic products
Percent of Total Output
U.S.
Oklahoma
4.4
13.9
7.1
16.4
2.3
4.5
7.2
14.3
3.6
5.2
4.1
4.6
12.2
9.9
12.6
9.4
2.5
1.8
3.8
2.7
2.3
1.4
4.5
2.1
3.7
1.7
1.3
0.6
16.1
7.4
1.4
0.6
9.5
3.5
Location Quotient
3.2
2.3
2.0
2.0
1.4
1.1
0.8
0.8
0.7
0.7
0.6
0.5
0.5
0.5
0.5
0.4
0.4
Note - Location quotient is the division of local employment share by national employment share
Source: U.S. Census Bureau ASM
Summary
• U.S. manufacturing slowed in early
2013 as jobs and hours flattened
out, but growth has risen since Q2
• Regional and Oklahoma factory
activity has also picked up lately,
driven in part by stronger exports
Questions and Links
For more information about the Kansas City
Fed’s Monthly Survey of Manufacturers,
please go to our website:
www.kansascityfed.org/research/indicatorsdata/mfg
For more information about the Oklahoma
economy, subscribe to the quarterly
Oklahoma Economist at:
www.kansascityfed.org/publications/research/oke