Struggling US sectors trim work hours rather than slash payrolls

U.S. employers in struggling sectors such as manufacturing are reducing hours rather than resorting to aggressive job cuts, with flashbacks to recent labor shortages that challenged so many companies.

The average number of weekly hours for nonsupervisory workers in manufacturing slipped last month to 40.6, matching the lowest since the early days of the pandemic, the government’s jobs report showed Friday.

The latest data available for the truck transportation industry show the fewest hours worked since 2020, while weekly hours at warehouses are at a one-year low.

Manufacturing and transportation are among industries struggling for traction as many consumers change their spending patterns from goods back to services. U.S. factory activity has now contracted for nine months and freight activity has slowed.

Despite recent woes, goods-focused companies have gone only so far in trimming payrolls. While manufacturers and transportation firms alike have largely scaled back hiring plans since last year, employment growth in those industries has merely stagnated.

“While business has slowed in some industries, employers are largely reluctant to let workers go out of fears that rehiring may be difficult when the economy reaccelerates,” Bill Adams, chief economist for Comerica Bank, said. “That’s translating into a pullback in the average workweek.”

The average workweek for all nonsupervisory workers — which includes a majority of U.S. workers who aren’t in management positions — held at 33.8 last month, matching the lowest since April 2020.

Some may view that as cracks forming in the job market, but Omair Sharif, president and founder of Inflation Insights LLC, notes that hours worked are merely normalizing.

“While the workweek has clearly moderated from the roughly 34.5 hours in early 2021, it still looks quite healthy when compared to the pre-COVID average,” he said.