The industrial production (IP) index is a popular metric of economic activity because it’s available relatively quickly. This monthly data series covers only a part of economic activity, however. In particular, it misses the service sector and the government sector. The graph above shows its evolution since 1972 along with a subcomponent that covers only manufacturing. Note that the index is set at 100 in 2012, meaning that all the indexes will always cross in 2012. A particularly healthy sector will start lower before 2012 and then rise higher after 2012. The graph shows that manufacturing has done well compared with overall industrial production before 2012 and a little less well afterward. This hides considerable sectoral differences, though.
In this second graph, we highlight some sectors within manufacturing. The sector that appears to have suffered massive losses is apparel and leather goods. Indeed, clothes manufacturing largely migrated abroad during this time span, with a decrease in production of about 80% since the mid 1990s. On the other extreme is computer manufacturing; It was insignificant in the first years but has increased by 1200% since the mid 1990s. All other sectors lie somewhere in between, and they average out to the manufacturing index shown in the first graph, which does not look as dramatic as the second graph. Some other interesting observations in this second graph: The primary metal industry has remained essentially unchanged over the past 45 years, with its index hovering around 100 throughout the sample period. The furniture industry incurred great losses from the Great Recession that it has not yet recovered from. And the car industry is doing pretty well.
How these graphs were created: For the first, search for industrial production, select the two series (likely the top choices), click on “Add to Graph,” and adjust the time period to start on 1972-01-01. For the second, go to the industrial production release, and select the monthly and seasonally adjusted tags. In the list, choose the series according to industry, and click on “Add to Graph.”
Suggested by Christian Zimmermann.