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Trump's manufacturing revival stalls as job gains evaporate

U.S. employers shed manufacturing jobs in March for the first time since July 2017, as President Donald Trump's pledge to bring back industrial jobs lost to foreign competition bumps up against a globalized economy and increasing automation.

The U.S. lost 6,000 manufacturing jobs in March, according to the U.S. Bureau of Labor Statistics, even as the overall U.S. economy added 196,000 jobs, continuing a stretch of employment growth that goes back to 2010. Before the March drop, the manufacturing sector had added fewer jobs each month since October 2018, when 29,000 workers were added to manufacturing payrolls among the 277,000 nonfarm jobs gained.

Blaming more open trade for bringing an influx of cheap imports, Trump campaigned on a promise to restore the U.S. manufacturing base after years of U.S. factory owners going out of business or moving production to lower-cost countries. "My plan includes a pledge to restore manufacturing in the United States," Trump said at a 2016 rally in Michigan.

Manufacturing employment has risen faster during Trump's time in office than his predecessor Barack Obama. The U.S. economy created 453,000 manufacturing jobs since Trump's first full month in power in February 2017, or 17,423 per month, faster than the 10,592 monthly pace under Obama starting from October 2010, when payroll numbers turned positive following the Great Recession, according to BLS data.

The total manufacturing workforce is about 13 million, far smaller than in the postwar boom years when it peaked at nearly 20 million workers in 1977. The services-producing sector, which employs about 10x as many people, has posted growth of nearly 3.8 million jobs during the Trump era and supplied 184,000 of the net 196,000-job gain in March.

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The relative decline of manufacturing as an employment provider in the U.S. is part of a fundamental transformation of the economy for the better, said Douglas Holtz-Eakin, president of the American Action Forum, a conservative think tank.

"Over the long term, it has been true that manufacturing production has stayed roughly the same share of the U.S. economy as in the past, but manufacturing employment has diminished sharply. That's the same thing as saying manufacturing has had the best productivity growth," Holtz-Eakin, a former Congressional Budget Office director, said in an interview. "That's generally considered a good news story, for the record."

Compounding this is the fact that when labor markets are tight and wages increase, businesses usually turn toward research and development and capital deepening rather than shift toward production, Deutsche Bank economist Justin Weidner said.

"Even if global growth did pick up meaningfully and there was a surge in demand for manufactured goods, I would think that this would be met a bit more by automation rather than a meaningful pickup in jobs," he said in an interview.

Gregory Daco, head of U.S. economics at Oxford Economics, pointed to the manufacturing sector's resilience in spite of headwinds from outside the U.S. "Purchasing managers are facing an environment in which global momentum has slowed, export-oriented activities have moderated, an environment in which trade tensions between the two largest economies in the world linger," he said in an interview. Manufacturers "are exhibiting caution when it comes to hiring, but they generally remain fairly positive about the outlook."