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A plateau for manufacturing?

After steady growth, manufacturing productivity seems at a standstill

The Bureau of Labor Statistics’ productivity and costs release provides data that can help us better understand the state of U.S. manufacturing. The graph above shows the evolution of manufacturing output since 1987. Notice the slow but steady growth in output since the Great Recession’s big dip.

What’s behind this slow and steady growth? The first suspect we’ll look at is manufacturing employment. The graph above shows there’s been a strong downward trend, which has accelerated during each recession. Yet, since 2010, manufacturing employment has been slowly making its way back up.

Next we’ll look at how much each worker produces in the manufacturing sector. Here, the story’s different: The general trend has been continuous increases in productivity per worker, but something seems to have broken with the Great Recession. First a major drop in productivity, then some progress getting back to trend, and then no progress since about 2010.

What if, since the Great Recession, manufacturing jobs have offered fewer hours of work or more part-time work? Maybe productivity per hour worked is growing. But the graph above, which shows productivity per hour instead of per person, shows no difference. The cause of this productivity standstill is thus either lack of technological progress or (more likely) a change in the composition of the manufacturing workforce toward lower-productivity work.

How these graphs were created: Search for “manufacturing sector” and each of the discussed series should be among the top choices. Simply choose them and click “Add to Graph.”

Suggested by Christian Zimmermann.

View on FRED, series used in this post: OPHMFG, OUTMS, PRS30006013, PRS30006163

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