The latest data from the Labor Department suggest the ongoing ramp up in aerospace production continues at an orderly pace.
UBS Securities analyst David Strauss said in a research note Tuesday that he monitors the average weekly U.S. aerospace overtime hours as a way to gauge the health of the production process as volumes in the industry grow.
He said November overtime averaged 6.1 hours, higher than in October (5.7) but the same as last November, and lower than historically in the fourth quarter (6.4).
“Overtime hours remain well below levels seen last upcycle, implying orderly production ramp,” he said.
Strauss noted that aerospace overtime hours have averaged about six hours per week during the last 15 years, essentially within a tight five- to six-hour range. But, during the last upcycle, average weekly overtime hours spiked to eight to nine hours in late 1996, and remained elevated through most of 1998 as Boeing and aerospace suppliers dealt with production problems.
“While aero employment levels are up 9 percent from 2005, we expect the aero companies to benefit from much lower employment levels this cycle,” Strauss said. “According to the Bureau of Labor Statistics, there are 56,000, or 20 percent, fewer U.S. aero production workers today as compared to the peak of last cycle.”
