What This Chart Shows
This chart composites four FRED manufacturing labor series into a single Z-score indicator: Average Weekly Overtime Hours (Manufacturing), Average Weekly Overtime Hours (All Employees, Manufacturing), Average Weekly Hours (Manufacturing), and Average Weekly Hours (All Employees, Manufacturing).
Each series is converted to its Z-score (standard deviations from its own historical mean), then averaged. The result is a normalized composite that captures the overall health of manufacturing labor demand. The ISM Manufacturing PMI is overlaid on the right axis for direct comparison. Grey shaded regions mark NBER recession periods.
How to Read It
When the composite is above zero, manufacturing labor demand is running above its historical average — a signal of economic expansion. Readings below zero indicate contraction. Sharp declines toward -1.0 or lower have historically preceded or coincided with recessions. The ISM overlay shows how closely the two signals track — ISM below 50 (contraction) aligns with negative Z-scores. The speed and direction of the move matter as much as the absolute level.