09202019Fri
Last updateThu, 19 Sep 2019 4pm

Is the ‘Skills Gap’ Problem a Myth?

For years now we’ve heard that U.S. manufacturers have difficulty hiring due to a so-called “skills gap.” But Andrew Weaver of the MIT Technology Review has gone through the data and isn’t convinced.

“I have conducted a series of nationally representative skill surveys covering a range of technical occupations: manufacturing production workers, IT help-desk technicians, and laboratory technologists,” Weaver writes.

“The results yield a number of surprises. First, persistent hiring problems are less widespread than many pundits and industry representatives claim. A few years back, Paul Osterman of MIT’s Sloan School of Management and I found that less than a quarter of manufacturing plants had one or more production-­worker vacancies that had lasted for three months or more. By contrast, industry claims at the time were that three-­quarters or more faced a persistent inability to hire skilled workers.”


U.S. Factory Output Rebounded in August

Industrial production rose 0.6% in August after declining 0.1% in July. Manufacturing output rose 0.5% in August, as the indexes for durables and for nondurables increased while the index for other manufacturing (publishing and logging) edged down.

Production rose for most major categories within durable manufacturing. The largest gains were recorded by machinery, primary metals, and nonmetallic mineral products; the only sizable decline was recorded by motor vehicles and parts.

Small Business Economy Remains Steady

The NFIB Small Business Optimism Index fell 1.6 points to 103.1, remaining within the top 15% of readings. Overall, August was a good month for small business. However, optimism slipped because fewer owners said they expect better business conditions and real sales volumes in the coming months. Job creation accelerated, positive earnings trends improved, and quarter-on-quarter sales gains remained strong. Plans to invest were the strongest in the manufacturing sector (35%), followed by agriculture (30%) and wholesale trades (30%).

Consumer Sentiment Stabilizes After Three-Year Low in August

The University of Michigan Index of Consumer Sentiment posted a small rebound from the sharp August decline, marking the third lowest level since Trump's election. While the uptick was across both current and expected economic conditions, the early September rebound was not widespread across age or income subgroups as it only fell among consumers under age 45 and among households with incomes in the top third---these two groups account for about half of all spending. The data indicates that consumers anticipate that the Fed will cut interest rates next week, with net declines in interest rates more frequently expected at present than any time since the depths of the Great Recession in February 2009.

Houston Manufacturing Executives Feeling More Optimistic

The Houston Purchasing Managers Index (PMI), a short-term leading indicator for regional production, registered 51.6 in August, slightly up from 51.4 in July. Readings above 45 signal overall economic expansion in Houston over the next three to four months. Readings above 50 signal expansion in the manufacturing sector. The region’s PMI has signaled expansion in overall economic activity for 37 consecutive months and manufacturing activity for 24 consecutive months.

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