Federal Reserve Economic Data

Manufacturing is the creation or production of goods with the help of equipment, labor, and chemical or biological processing or formulation. It’s different from mining and construction.

Our first FRED graph, above, tracks the number of employees in these three industries since 1939. After a strong buildup during WWII, manufacturing employment has stayed within a band of 11 to 20 million, with about 13 million currently. There are obvious cyclical fluctuations, but no longer-term trends after its big decline in the first decade of the 21st century. Employment has steadily increased for construction and decreased for mining.

Our second graph divides the same data by the total number of US employees. When we look at each industry’s share of employment in the economy, we get a different perspective: Manufacturing has  steadily declined, construction is stable, and mining has become very small.

Now let’s look at the output of the manufacturing sector. These data don’t go far back, but we can see a marked rise from 1987 to about 2000 and then a flat trend with some cyclical fluctuations. This graph uses an index, which doesn’t say anything about the share of manufacturing output in the economy.

Our last graph tracks the share of manufacturing output in the economy: The data start in 2005 and show the tail end of the decline in the 2000s before it flattens out. Clearly, manufacturing output has done better than manufacturing employment due to an increase in productivity, in part thanks to a move to higher value manufacturing. There may also be very different evolutions for subsectors within the manufacturing industry, as well as long-run trends that any modern economy might experience.

How these graphs were created: Search FRED for the Current Employment Statistics release table and choose Table B-1 (seasonally adjusted); select the series you want and click “Add to Graph.” This the first graph. From the “Edit Graph” panel, for each line add series “All employees, non-farm” and apply formula a/b*100. You have the second graph. For the last two, simply search FRED for “manufacturing output” and “manufacturing value added.”

Suggested by Christian Zimmermann.

In recent decades, the US has grown increasingly dependent on imports from China to access a vast variety of goods. The FRED graph above shows Chinese import data: From 1990 through 2016, as China became a globally integrated economy, the US import share from China grew steadily, from close to 2% of aggregate US imports in the late 1980s to close to 22% in 2016.

In recent years, however, policies have been enacted to reduce this dependence on China, as illustrated by the trade war during the Trump administration and the CHIPS and Science Act of 2022. Indeed, the US import share from China has declined from 22% to 14% since 2016.

As the cost of importing Chinese goods has increased, the incentive to produce goods domestically has also increased. So, to what extent is the US-China decoupling leading to a resurgence of American manufacturing? We investigate this question in the FRED graph below, plotting manufacturing investment in structure and equipment, as well as employment and output.

On the one hand, there has been a resurgence of manufacturing investment in structures since 2020. These investments may indicate that American manufacturing overall is indeed resurging, with investments in structures more than doubling in a short period.

On the other hand, output, employment, and investments in equipment haven’t increased in tandem with the growth of investment in structures. We interpret these findings as evidence that American manufacturing may be resurging, but that the resurgence may take time: Investment in structures is time-intensive and precedes the growth of employment and output that results once new manufacturing plants are completed.

How these graphs were created: First graph: Search FRED for and select “U.S. Imports of Goods by Customs Basis from China.” From the “Edit Graph” panel, use “Edit Line 1” to add “U.S. Imports of Goods by Customs Basis from World” to the existing series. Under “Customize data,” type a/b into the formula bar, and click “Apply.” Set “Modify Frequency” to “Annual.”
Second graph: Search FRED for and select “Real private fixed investment: Nonresidential: Structures: Manufacturing/Real Gross Domestic Product.” From the “Edit Graph” panel, use “Add Line” to add “Real Gross Private Domestic Investment: Fixed Investment: Nonresidential: Equipment,” “Manufacturing Sector: Real Sectoral Output for All Workers,” and “All Employees, Manufacturing.” Under the “Edit Line” tab for each of the four lines, change the “Units” to “Index (Scale value to 100 for chosen date)” and enter “2010-01-01” for the base period.

Suggested by Jason Dunn and Fernando Leibovici.

Obviously, major wars take their toll on a country’s population. They also affect economies in distinct ways. For example, wars affect the manufacturing sector as firms ramp up production of military vehicles, munitions, and the like. The current war in Ukraine, while far away from the United States, may still be having an impact here, given that the United States has promised military equipment to Ukraine. Other countries have done the same and are also ramping up their own purchases. FRED has some related data (at least back to 1994) that may help show what’s happening on the manufacturing front.

The Manufacturers’ Shipments, Inventories, & Orders survey from the U.S. Census Bureau doesn’t detail the defense sector, but it does provide data on manufacturing with and without defense. So, we can graph the difference.

The first graph shows new orders. If the war was a complete surprise and governments are only now scrambling to acquire military equipment, we’d expect new orders to be significantly up. At the time of this writing, that does not appear to be the case. But maybe they had enough foresight and are taking deliveries now. The second graph looks at shipments. While there’s an increase, it appears to follow a trend that predates the Ukraine war quite a bit.

Another impact could be that the new demand for armaments is reducing manufacturers’ inventories. Our last graph looks at this, and inventories are actually up. Could this be in anticipation of increased demand in the near future? We can’t tell simply by looking at the graphs. So, in conclusion, we don’t see any hard evidence that this war has had any notable effect on U.S. manufacturing yet.

How these graphs were created: For each graph, start by searching FRED for the series (say, manufacturers inventories) adding the “defense” keyword to narrow the results. Once you have the graph, click on “Edit Graph,” add the other series by searching for the same keywords without “defense,” and apply formula b-a.

Suggested by Christian Zimmermann.