This year’s election has been a roller-coaster for everyone, and the manufacturing sector is no exception. There has been plenty of discussion from both sides on the right course for the industry, from Donald Trump pledging to bring trade cases against China to Hillary Clinton’s evolving stances on the Trans-Pacific Partnership (TPP).
Job seekers in the manufacturing sector might be worried that firms will put the brakes on hiring until a winner emerges on November 9. There is some evidence that may occur: 40 percent of US CFOs said they are holding off on hiring due to political risk, according to a recent survey conducted by Duke’s Fuqua School of Business, and 26 percent said they have delayed spending plans specifically due to the presidential election.
Of those 26 percent, 77 percent said they will continue to delay investment decisions if Hillary Clinton is elected as they wait to see how her policies play out. Fifty-one percent said they will continue to delay investment decisions if Donald Trump is elected.
But if one looks at historical hiring data, it appears that the uncertainty surrounding elections doesn’t have much of an effect on the overall pace of hiring.
Data Show US Elections Don’t Hinder Economic Growth
Real US GDP growth has actually been statistically significantly stronger during election years, according to a study published by Wells Fargo Securities in June. Since 1960, real GDP has expanded at an average rate of 3.74% during election years, versus an average of 2.86% during non-election years.
Looking at hiring in the manufacturing sector specifically, the data doesn’t show any peaks or troughs around elections. Looking at the data from the US Bureau of Labor Statistics, hiring trends during election years tend to reflect broader economic conditions, rather than rising or falling around November.
Manufacturing Hiring Trends During Past Election Years
- 1996: Manufacturing payrolls rose steadily throughout the year. At the time the US economy was in the midst of the Dot-com bubble.
- 2000: Payrolls peaked in July and declined steadily in the second half of the year. That year, the Federal Reserve raised interest rates and the Dot-com bubble burst in March.
- 2008: Manufacturing payrolls declined steadily throughout the year, a direct result of the Global Financial Crisis.
- 2012: Payrolls peaked in July and then remained fairly stable for the rest of the year, as the US slowly recovered from the Financial Crisis.
What’s Next for this Year’s Election?
For 2016, the data shows payrolls declining from a January peak, with a brief uptick in July followed by more declines. But this is attributable to weakened international demand for US goods and a resulting contraction in the US manufacturing sector, not necessarily uncertainty around the election.
Certainly each presidential candidate has a very different view on how to strengthen the manufacturing industry.
Click here to read the follow-up analysis on Trump’s manufacturing policies and how these policies may impact hiring for 2017.
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