August 01, 2012

Manufacturing: Is the Ride Sustainable

The decline in manufacturing sector has been continuing. While the economy seemingly boomed, the U.S. manufacturing sector continued its journey downhill. The trends in overall employment, non-farm sector employment, and private sector employment have all been rising through 2002-2008, but it was reverse case for manufacturing (See graph: Employment: Manufacturing lags). With the recession and economy slump, the sector’s fall only becomes precipitous. Additionally, in the recent times, while total workforce numbers, total non-farm employment, and private employment have all shown a steady rise, manufacturing jobs have been at a trickle.

Visualizing the trend

The Graph (See red arrows in graph: Employment: Manufacturing lags) clearly shows that while all other curves hug each other and follow the same pattern over the years, manufacturing has lagged all other employment indicators. The Great American Dream, centered on the industrial revolution seems to have lost steam. In an election year, with employment in focus, manufacturing has barely shown rise despite higher rise overall.

What to expect?

It is difficult to sustain even a slow employment growth in the manufacturing sector, given the unchanged fundamentals, a weak demand from Europe, and the threat of Chinese production, all pitted against an election year blip.