NCPA - National Center for Policy Analysis


April 7, 2006

Manufacturing in America is producing and exporting more goods than ever before, says David Huether, chief economist at the National Association of Manufacturers.

In 2004 and 2005, manufacturing's expansion easily outpaced the larger U.S. economy. Yet, manufacturing employment at 14.2 million workers is at its lowest level in more than 50 years. So why is manufacturing output at an all-time high?

  • Since 2001, with the aid of computers, telecommunications advances and ever more efficient plant operations, U.S. manufacturing productivity, or the amount of goods or services a worker produces in an hour, has soared a dizzying 24 percent.
  • Persistently slow economic growth in Japan and Europe has limited demand for United States-made goods and thus worked to lower post-recession output from American plants, as did the uncertainties caused by the September 11 attacks, corporate scandals and the buildup of war in Iraq during the early stages of our current expansion.
  • U.S. manufacturing output has increased a welcome 13 percent since the end of 2001, but that growth is barely half the average increase during the initial four years of the previous four recoveries.

So, it has been this lower demand and output, coupled with high productivity growth that has conspired to depress the kind of manufacturing job creation we might otherwise have expected since 2002, says Huether. Looking ahead, the number of manufacturing jobs we create or lose will depend entirely on the global demand for U.S.-made products.

Source: David Huether, "The Case of the Missing Jobs," Business Week, April 3, 2006.


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