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Posts tagged with: "OPHMFG"

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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

Manufacturing: Up? Down?

Is manufacturing up or down? As economists like to say, it depends. The graph above shows three indicators of U.S. manufacturing activity, and they point in different directions. Manufacturing output is definitively trending up; that is, the number of things produced in this country has increased over time and is currently increasing. This production is accomplished, however, with fewer and fewer employees. It should be no surprise that an economy becomes increasingly better (quicker, more efficient, etc.) at producing things, thanks to increasing productivity per employee through innovations, for example. Recently, though, manufacturing employment is trending up slightly, while productivity has slowed down (as it has in other sectors).

Is this good or bad? Employing people is clearly important. Yet, when an industry needs fewer people because it is better at doing something, this is viewed as a gain by economists: Workers who aren’t needed any more can move on to produce something else. Of course, there are costs in the process if displaced workers cannot find new employment right away. The U.S. has a relatively flexible labor market that has generally managed to respond well to such challenges. In the short-term, though, the gains are not shared by everyone. Manufacturing unemployment is particularly high in recessions, as is seen in the graph below. But consider yet another twist: The current unemployment rate for manufacturing is lower than the rate for the general population.

How these graphs were created: For the first graph, search for “manufacturing sector,” check on the series you want to graph, and click on “Add to Graph.” For the second graph, search for “manufacturing unemployment rate” and “civilian unemployment rate.” Restrict the sample period to start in the year 2000.

Suggested by Christian Zimmermann

View on FRED, series used in this post: LNU04032232, OPHMFG, OUTMS, PRS30006013, UNRATE

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