Today’s ISM Manufacturing Index was a winner in the sense that it showed the goods-producing sector expanded for the 12th straight month. Growth is good, more so than ever at this critical juncture. The crowd certainly understands this. As the AP reported today via the LA Times: “Wall Street reacts favorably to the Institute for Supply Management report, the first major economic indicator for July, sending the Dow up 208 points.” It’s certainly good news, but does it fall short on the labor front?

U.S. manufacturing output has been climbing for decades, but without adding employees. Consider the Fed’s Industrial Production Index. Predictably, it turns down during recessions, and took a hefty fall during the Great Recession; but the the long-run trend is bullish. Industrial production has been expanding for many years.

Now compare the upward bias in industrial production with the trend in U.S. goods-producing employment, as shown in the second graph below.

At best you can say that employment has been moving sideways—except lately. The Great Recession took a hefty bite out of goods-producing employment. But this corner of the labor market had been dropping well ahead of the latest economic contraction. There are many reasons for this, such as offshoring and increased use of technology in manufacturing. Meantime, we should be careful about expecting a robust manufacturing sector (if in fact that’s what we have) to contribute much, if anything, to resolving the main challenge still weighing on the economy: a weak rebound in job creation.