Comments on economics, mystery fiction, drama, and art.

Monday, March 09, 2009

What's wrong with the employment numbers in the steel industry? I don't know, but I also don't believe them.

I commented in my previous post that I found the employment data for northwest Indiana, particularly in the steel industry, hard to believe. Here’s why.

American Iron and Steel Institute reports that steel shipments for the three most recent months for which data are available, and for the corresponding three months one year earlier are:

…………………….....Shipments (tons)

Clearly, steel production has declined precipitously just in the final two months of 2008, and is down more than 50% in December 2008 compared with December 2007. For the week ended February 28, the Chicago/Northwest Indiana region accounted for about 30% of the US total of 980,000 tons; call it about 1.2 million tons per month at that rate. In late 2007, that implies a production level of around 2.4 million tons per month; in other words, the current output level is about half its level in the previous year.

But the reported employment numbers do not seem to bear any close relationship to these outout declines, either
locally or nationally. Nationally, employment in iron and steel mills fell from a monthly average (for October 2007 through January 2008) of 99,400 to 96,100, a decline of 3.3%. That’s hard enough to believe when shipments are down by more than 50% (December to December). But reported employment in northwest Indiana not only did not fall, it rose—from a monthly average of 16,950 to 17,125, up a little over 1% (but up an astonishing 3.5%, January 2008 to January 2009.

If those employment figures are accurate--and I frankly don't see how they can possibly be accurate, either nationally or locally, we should expect to see sharp declines in employment in iron and steel mills happening in the very near-term future. The declining production in autos, trucks, heavy equipment, and appliances, and the continuing declines in construction make that all but certain.


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