3 Reasons to be Bullish on U.S. Manufacturing
When you’re surrounded on all sides by a service economy, it can be easy to forget that stuff still actually needs to be built. Most of us rarely, if ever, deal with the actual manufacture of goods.
According to the Bureau of Labor Statistics, the service providing sector accounted for 79.9% of total employment in 2012, and the share is expected to edge up to 80.9% by 2022. Meanwhile, goods producing sectors (excluding agriculture) liked mining, construction, and manufacturing accounted for just 12.6% of total employment, and the share is expected to fall to 12.1 percent by 2022. Manufacturing itself (separated from mining and construction in the BLS data) employs just 8.2% of the total, and the share is expected to fall to 7.1% in 2022.
The “decline of U.S. manufacturing” captured by this data didn’t so much catch people off guard as it simply rolled through the economy like a cannonball. The evaporation of demand caused by lower-cost competition from emerging industrial countries was unavoidable, and in a sense many jobs were simply exported. Total employment in manufacturing peaked near 20 million in 1979, about 22% of total employment at the time, according to the BLS. Since then, manufacturing employment has fallen to about 12.1 million.
But despite the dramatic decline in employment, total real manufacturing output has nearly recovered to its pre-crisis peak. Real manufacturing output per hour is up more than 13% since the pre-crisis peak and measures of manufacturing activity show accelerated growth across most major components of the sector. This suggests that the blow to U.S. manufacturing was real, but far from fatal. In fact, the blow may have ultimately made the sector stronger. Many of the companies that survived (and the few that thrived) are leaner, savvier, and more innovative relative to the rest of the world than they were 10 or 15 years ago.
Here are a couple of reasons why things are looking up for U.S. manufacturing.