We dance round in a ring and suppose, But the Secret sits in the middle and knows. - Robert Frost
We dance round in a ring and suppose, But the Secret sits in the middle and knows.
U.S. manufacturing might be holding up better than many would expect given the economic and geopolitical strain of the past several years. Average weekly manufacturing hours worked recently reached 41.4, the highest reading since 2022, and has remained above its 36-month moving average for 14 consecutive months. The current gap to that trend is 0.55 hours, in roughly the 91st percentile of the past 40 years. Hours worked also tend to adjust earlier than head count, making it a useful early read on stabilization in industrial demand. Historically, manufacturing hours worked has led manufacturing jobs by about seven months and has shown a strong correlation with subsequent employment trends.
Manufacturing hours worked might also be picking up a change in how firms are responding to demand. ISM Manufacturing PMI moved back above 50 (a number above 50 signals expansion; a number below 50 signals contraction) at the start of 2026 after spending most of 2025 in contractionary territory, which points to some improvement in activity. Manufacturing payroll employment, as measured by the U.S. Bureau of Labor Statistics, has remained below its January 2023 peak. Employment in the sector peaked at 12.9 million in January 2023 and most recently stood at 12.6 million as of March 2026, a decline of 312,000 jobs. The divergence between rising hours worked and falling employment suggests firms are meeting marginal demand through labor intensity rather than hiring, consistent with heightened uncertainty around labor availability, cost, or substitution risk. Firms appear willing to stretch existing capacity before adding workers.
Part of the improvement in manufacturing hours worked might reflect an industrial economy that is gradually finding its footing after several years of disruption. The post-COVID-19 boom and unwind created distortions across inventories, production schedules and supply chains that have taken time to work through. Friend-shoring and reshoring trends also appear to be reinforcing U.S. manufacturing activity as supply chain resiliency is increasingly prioritized over marginal cost minimization. Tariffs fit within that broader shift as firms place greater value on security, flexibility and control over production than they did during the pre-COVID-19 era of globalization. A more stable manufacturing backdrop would be meaningful even if the progress remains uneven.
Market attention often narrows around the biggest and most urgent story in front of it, especially during periods shaped by geopolitical risk. Smaller but still meaningful signals can receive less attention in that environment than they deserve. Manufacturing hours worked might be one of those signals. Taken together, the data suggests the manufacturing environment might be firmer than broad sentiment implies. That matters because markets and economies rarely move in a single direction all at once.
Between the Lines is a weekly blog by DoubleLine Portfolio Managers Sam Garza, Joseph Mezyk and Quant Analysts Fei He, CFA and Sunyu Wang that breaks down topical macro and market issues. For questions or suggestions please e-mail us at betweenthelines@doubleline.com. The views and opinions expressed herein are those of the authors and do not necessarily reflect the views of DoubleLine Capital LP, its affiliates or employees.
