A jump of 17,000 in U.S. factory jobs last month indicates manufacturers expect their businesses to keep growing despite the obstacles posed by a slowing global economy and President Trump’s trade battles.
The new positions pushed average manufacturing employment gains to 8,000 a month for 2019, an upbeat signal for the U.S., though markedly slower than the 22,000-a-month average last year. Employers hired just 3,000 factory workers a month in April and May, the Labor Department reported Friday.
“We’ve seen a lot of weakness in that sector over the past few months,” Joseph Song, an economist with Bank of America, told the Washington Examiner. The latest numbers suggest that “all the tensions around trade and higher tariffs haven’t necessarily led to businesses completely pulling back.”
Trump’s trade policies, including tariffs on $250 billion of Chinese imports, steel, and aluminum, have weighed on businesses for the past year. The duties themselves, and the constant threat of more to come, have slowed investment in new factories since executives are unsure how their supply chains and profit margins will be affected.
Most were pleased, however, when the president pulled back on a threat to add 25% levies to all remaining Chinese goods, which amount to more than $300 billion, after meeting with his Chinese counterpart, Xi Jinping, at the G20 summit in Osaka, Japan. Instead, the two leaders agreed to continue talks on a broader trade pact that fell apart in May.
Any deal “has to be better for us than for them because they had such a big advantage for so many years,” Trump said after returning to Washington. “It has to be a deal that is somewhat tilted to our advantage. And if we’re not going to do that, we’re taking in a fortune from tariffs.”
His repeated statements that the U.S. Treasury benefits from tariff payments has chafed U.S. businesses, who pay the duties when their orders arrive in U.S. ports.
At enginemaker Cummins Inc., the costs from the levies have already topped savings from sweeping corporate tax cuts enacted by a Republican Congress at the end of 2017, and the Columbus, Ind.-based manufacturer isn’t alone. CEO Tom Linebarger has heard similar reports from the heads of other companies in his role as chairman of the Business Roundtable’s trade committee.
“Manufacturers need certainty,” Jay Timmons, president of the National Association of Manufacturers, said earlier this week. Not only have American companies suffered for China’s intellectual property theft and limited access to the country’s markets — which Trump wants to change — “the effects of tariffs and retaliatory tariffs are further weighing on our confidence and our ability to hire and grow,” he said.
