America's factories are riding an export wave.
New export orders for US manufacturers in March rose to their highest level in more than 20 years, according to data released Thursday by the Institute of Supply Management (ISM). It was the ninth straight month its index of export orders signaled growth and part of a strong overall report that showed industrial activity rising at the fastest pace since July 2004.
There's just one problem. For all the good things manufacturing exports do – increase world trade, readjust America's trade imbalance, open new and dynamic markets for US businesses – they don't create a whole lot of jobs. Indeed, the pace of growth in factory jobs slipped a little in March.
"These are highly capital-intensive industries," says Brian Bethune, an economist at IHS Global Insight in Lexington, Mass. They use robots and highly sophisticated machines to create big-ticket goods like turbines. But "they're not really big employment generators."
That's why the growth in exports hasn't done much to drive up US employment.
Still, the 61.5 in the ISM's new export orders index is something to cheer. It's the highest level since September 1989 and shows how US manufacturers are making money by selling to China and Canada. Anything 50 or over is considered growth.
But other sectors will have to recover in the domestic economy to begin creating lots of new US jobs.