U.S. Factory Jobs Plunge; Factory Health Gauge Drops Again

In two key economic reports Friday, the U.S. Labor Department said the number of factory-sector jobs plummeted by 124,000, while the National Association of Purchasing Management said its main factory activity gauge shrank again.

Both reports are bad news for the trucking industry, which sees manufacturing as a major customer base for freight shipments.

The NAPM gauge fell for the 10th straight month, and at 42.1, the reading is well below the 50 level that marks the dividing line between contraction and expansion for factories.

The jobs data was the darkest material in a U.S. employment report that showed the household jobless rate actually improving a bit, to 4.4% in May from 4.5% in April. The average workweek notched upward, as did average hourly earnings.

However, overall payroll jobs declined by 19,000 as gains in some industries were swamped by the drop in factory jobs last month.

As the overall job market continues to weaken, this could weigh on consumers’ buying sentiments, further undermining the purchases of goods that trucks haul.

Among the damage not yet caught by either report was Friday’s announcement by heavy-truck engine supplier Cummins that it would have to cut 500 jobs and shut down an engine project (See related story, June 1).

If there good news related to the NAPM data, news reports suggested it might lie in what the manufacturing contraction can mean for future cuts in U.S. interest rates by the Federal Reserve.

Until Friday, financial market observers had been saying the Fed might slow down in its rate cut program and only make a quarter-point cut later this month, after a series of half-point cuts this year. Now, some are again saying the Fed will probably have to keep cutting more aggressively.

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