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U.S. factories punch above weight with solid job gains

Friday, 7 Feb 2014 | 4:15 PM ET

WASHINGTON, Feb 7 (Reuters) - U.S. manufacturing stayed on solid ground in January, with employers stepping up hiring by adding 21,000 jobs to their payrolls and boosting their labor market share.

January's job gains marked the sixth straight month of increases in a sector that accounts for about 12 percent of the economy. They came despite a survey early this week signaling a sharp slowdown in factory activity and job creation in January.

While factory payrolls increased by only 8,000 in December, November's count was revised up by 4,000 to 35,000. Manufacturing accounted for 18.5 percent of the 113,000 jobs created last month, up from a 10.67 percent share in December, and was one of the brighter spots in a mixed overall employment picture .

"It's still far from a resurgence, but the jobs picture in manufacturing is certainly better than it was last decade," said Scott Paul, president of the Alliance for American Manufacturing in Washington.

Manufacturing lost 2.3 million jobs during the 2007-09 recession and has so far recovered 622,000.

"The latest jobs report offers fresh evidence that it is possible to create manufacturing jobs in America again. U.S. manufacturing sector is punching well above its diminished weight," said Paul.

The increase last month was triple the sector's average monthly jobs gains of 7,000 in 2013. There were notable rises in machinery, which added 7,000 new positions, wood products and motor vehicles and parts.

"Manufacturers have noted a pickup in demand and production over the past six months, which have led to increase in hiring overall," said Chad Moutray, chief economist at the National Association of Manufacturers in Washington.

President Barack Obama has set of a goal of 1 million manufacturing jobs to be created during his second term.

The recent pace over the past three months of 21,300 manufacturing jobs a month is just 3,400 short of the 24,700 pace needed for Obama to achieve that target.

At the current pace, though, he would fall about 120,000 jobs short of the target when his term ends in January 2017.

But with factory activity expected to slow in the first half of this year after output grew at its fastest pace in nearly two years in the fourth quarter, hiring could cool off a bit.

The Institute for Supply Management Management's index of national factory activity tumbled to an eight-month low in January and its measure of factory employment touched a seven month low. The index is considered a leading indicator of manufacturing activity.

In addition, auto makers have seen an increase in inventory after sales slowed in December and January. This suggests they would have to cut back production, which could hold back hiring.

"To ensure that the optimism for this year can be fulfilled, manufacturers want policymakers to adopt pro-growth measures that will allow them to continue to expand," said Moutray.