Data Show Weaknesses, Strengths in U.S. Manufacturing

As a driving force in the U.S. economy, manufacturing has lost much of its momentum. The dramatic decline in manufacturing jobs over the last decade makes the picture especially bleak. 

Source: U.S. Bureau of Labor Statistics; The Information Technology & Innovation Foundation

The decline in manufacturing jobs has coincided with a smaller worldwide role for U.S. manufacturing. Beginning in the late 1980s, China’s share of manufacturing has rapidly and steadily grown. It long ago overtook Japan (which began a slow decline in the late 1990s) and Germany (whose share has held remarkably steady).

Source: United Nations Conference on Trade and Development; ITIF

The United States lags behind its economic rivals in terms of the proportion of its manufacturing output that it exports.

Source: National Association of Manufacturers

When U.S. manufacturing performance is more closely examined, it becomes clear that several trends have been underway for years. As measured against the nation’s GDP, manufacturing has been flat or declining for years, but the decline is worse if the production of computers is taken away. Since the late 1990s, much of the country’s manufacturing growth has been directly attributable to making computers.

Source: ITIF

But the picture changes when you examine the value added in manufacturing, which is the gross output minus the value of the inputs. By this measure, China’s manufacturing sector is rapidly improving, but Germany’s performance has declined in the past decade, while the United States is holding relatively steady. 

Source: The Manufacturing Institute

According to the Bureau of Labor Statistics, the United States is among the leading countries in recent years in improving its manufacturing productivity. The first chart below shows the percent change in manufacturing output per hour between 2008 and 2009. The second chart shows the average annual percent change in manufacturing output per hour for the three decades between 1979 and 2009. 

Source: U.S. Bureau of Labor Statistics

Perhaps not surprisingly, the American public has a mixed sense of the future of manufacturing. A recent survey by the Manufacturing Institute and the consulting firm Deloitte asked a thousand Americans their views on manufacturing in the United States.

Question one: Percent of respondents who think the U.S. manufacturing industry can effectively compete in global markets.

Source: The Manufacturing Institute; Deloitte

Question two: Manufacturing activity over the next 12 months.

Source: The Manufacturing Institute; Deloitte

Question three: Longer-term outlook for manufacturing sector.

Source: The Manufacturing Institute; Deloitte