Manufacturing Health

If you want to know what the economy will do in the near future, look at the leading indicators. One well-established factor is the average hours worked per employee. Before companies hire new workers, they tend to have their existing employees work more hours. Similarly, before they lay people off, they tend to reduce hours people put in

Well, buried inside the latest employment report is the average hours worked by industry. It’s an obscure but important indicator of what’s going on in the economy. By looking at changes in the composition of the jobs out there we can get an idea of what the next few months will bring.

Average hours worked is going up modestly, so many expect employment to continue to expand slowly. But most interesting is the fact that manufacturers are growing their hours quite aggressively—by 1.4 hours per week over the last year. And interestingly, health care has been reducing its average hours worked per employee, in spite of the aggressive hiring this sector has undertaken.

This implies that jobs involved in making stuff will grow, while hiring for health care, and specifically health care administration, will likely slow down. The reason this is good for the US is because those stuff-making jobs tend to pay a lot better than the service-oriented jobs in health care. So we expect that consumer incomes will improve pretty rapidly in the near future, and that has broad implications—for consumer spending, for credit quality, and even for the housing sector.

By examining changes in the structure of our economy, we get a good idea where things are going. And right now, it’s fairly encouraging.

Douglas R. Tengdin, CFA
Chief Investment Officer
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By | 2014-09-11T15:30:05+00:00 May 19th, 2010|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. –
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