Private manufacturers' sales slowing
Raleigh, N.C., November 12, 2013—
Recent industry data
from Sageworks, a financial information company, show that manufacturing sales growth is slowing, providing a possible justification for disappointing hiring trends in the sector so far this year. U.S. manufacturers last month added more jobs than they had in eight months, but job gains in the sector continue to be below the expectations of some economists.
Manufacturers are growing sales at an annual rate of 2.3 percent, based on an analysis of private-company financial statements
through September. That’s notably slower than the 10.5 percent increase in 2012 and the 15 percent improvement in 2011, based on Sageworks’ data. The smallest manufacturers (those with annual sales below $5 million) have actually seen a roughly 3 percent decline in annual sales rates so far this year.
The sector is underpeforming other types of priately held companies, too. Private companies across all industries have been growing sales at an annual rate of 3.8 percent, compared with nearly double-digit sales growth in 2012 and 2011, according to the Private Company Report
from Sageworks. The smallest companies’ average sales growth is about 1 percent.
“We’re a little bit concerned, because privately held companies overall during this expansionary cycle have grown sales by about 10 percent a year for the past 3½ years or so, but over the past six to nine months, those growth rates have been going down.” said Sageworks Chairman Brian Hamilton. “No one knows for sure why companies in aggregate slow down, why their sales growth rates start going down. This gets into the cyclical nature of the economy and so on. But remember, we have been in this expansionary cycle for about four years, and on average in the U.S., typically, our economy tends to slow down at that time, so we’re a little concerned.”
The Bureau of Labor Statistics
on Nov. 8 said manufacturers added 19,000 net new jobs in October on a seasonally adjusted basis. Without the seasonal adjustment, they actually cut 4,000 jobs last month. Manufacturing employment is up less than 1 percent over the past 12 months.
Chad Moutray, chief economist for the National Association of Manufacturers
said in a blog post Friday that while the October jobs number for manufacturing was better than recent figures, it remains clear that “hiring growth for the sector has been disappointingly slow” over the past year.
“Manufacturers contributed just 2.4 percent of all of the nonfarm payroll workers added over the past 12 months, a far cry from the nearly 9 percent of the workforce that they comprise,” he wrote. “And, even in the larger economy, unemployment remains highly elevated, with net job gains still modest at best.”
About the Data
possesses a proprietary database of privately held company financial statements aggregated by industry. Sageworks aggregates private-company financial statements from accounting firms, banks, and credit unions through a cooperative data model with their clients. The data is segmented and can be queried by 1,400 industry codes
, 70 financial metrics, company size, and geographic location.
Raleigh, N.C.,-based Sageworks is a financial information company that provides financial analysis and industry benchmarking
solutions to accounting firms. Sageworks’ data and applications are used by thousands of banks and accounting firms across North America. Sageworks provides industry data on private companies to U.S. accounting firms at no cost. The company has been named to the Inc. 500 list of the fastest growing privately held companies in the U.S. and to the Deloitte Technology Fast 500.