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Focus: Manufacturing

Feature Article from Our Manufacturing Subject Area - See All

From SCDigest's On-Target E-Magazine

Nov. 27, 2012

Supply Chain News: US Manufacturing Still Hasn't Come All the Way Back from Recession, While Fate of Different Sectors Varies Dramatically

Only Three Sectors in Our Pool Are Currently Above Pre-Recession Levels of Output; Data Shows how Apparel, Furniture Production Has been Devastated

SCDigest Editorial Staff

It is certainly true that manufacturing has been a relative bright spot in the overall US economy's continued tepid recovery, but the overall picture is mixed at best.

SCDigest Says:

Overall manufacturing output for October came in at a level just above 93, meaning it is still about 7% below the peak in 2007. That is still a big delta five years later.

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According to data from the Federal Reserve, total US manufacturing output reached a peak in 2007, the year the Fed set as the 100 value in its index of manufacturing output. (Note: this discussion is focused specifically on manufacturing output, not full industrial output - the most commonly cited data by the media each month - which also includes output from mines and utilities, and can distort the manufacturing sector's performance.)

That means all of the data referenced in the article and the interactive web chart below is reference to that 2007 index base value of 100, meaning for example that a month with an index value of 90 had 10% less output during that period than the 2007 average. A score of 116 for a month would mean 16 more output.

As can be seen in the chart below, at the bottom of the recession in June of 2009, the index dropped all the way to about 79.9%, more than 20% below 2007 levels. That is quite a large decline in total output.

Since then, however, the path has been consistently up - but not enough to take the US back to the 2007 peak overall.

In data released earlier this month, overall manufacturing output for October came in at a level just above 93, meaning it is still about 7% below the peak in 2007. That is still a big delta five years later. A return just to 2007 levels would surely have a large impact on GDP growth and with luck employment numbers.

One interesting note is that contrary to some popular beliefs, total US manufacturing output did continue grow throughout the 1990s and 2000s when outsourcing really took hold, with the exception of the 2011 recession, though certainly not as fast as the growth seen in China over that same period. But decent growth nonetheless.

In addition to changing the time view via the controls on the top left, readers can mouse over the chart to see specific data points. The icons at the the top right also allow readers to print the chart or export as an image.

(Manufacturing Article Continued Below)

CATEGORY SPONSOR: SOFTEON

Big Differences by Industry

Of course, however, the story varies dramatically by industry.

The table below shows data across a number of select industries that represent a good swatch of manufacturing sectors, from chemicals to paperboard to apparel products (as well as roll-ups for overall consumer goods and consumer durables).

With the exception of the overall manufacturing number to lead things off, the remaining sectors are sorted from top to bottom by how large the drop off is from their current values to their peak values since 1990 (with the value again referenced to 2007 output volumes, whether that was the peak year for that sector or not).

The year and month of the peak is in parenthesis next to the sector name, meaning, for example, that the peak month of output for fabricated metals was in January of 2008.

Also displayed is the percentage change in output from 2007, and from SCDigest's arbitrary starting point of January, 1990 for the data.

US Manufacturing Output, Overall and Select Sectors, 1990 to Current
Manufacturing Sector and Peak Month	Change from 2007	Change from 1990	Change from Peak
All US Manufacturing (07-12)	-7.0%	60.4%	-7.7%
Food (12-09)	2.4%	33.1%	-1.9%
Computer-Electronics (12-06)	14.0%	1537.5%	-2.3%
Motor Vehicles and Parts (12-07)	1.5%	122.9%	-5.3%
Machinery (12-06)	-1.6%	31.8%	-5.9%
Fabricated Metals (08-01)	-6.0%	33.7%	-7.9%
Consumer Goods (07-02)	-7.9%	29.8%	-9.1%
Consumer Durables (07-04)	-9.3%	74.2%	-10.9%
Primary Metals (97-11)	-6.3%	9.9%	-12.7%
Plastic and Rubber Parts (05-12)	-8.2%	40.4%	-12.8%
Chemicals (07-09)	-13.4%	51.4%	-14.3%
Paperboard (Packaging Material) (95-04)	-9.1%	-4.4%	-21.1%
Pharmaceuticals-Medicine (06-12)	-21.5%	56.9%	-24.6%
Electrical Equipment - Appliances (00-07)	-14.1%	1.7%	-25.4%
Furniture (05-02)	-31.7%	-12.1%	-35.8%
Apparel (94-12)	-42.3%	-78.9%	-80.0%

Source: SCDigest, from Federal Reserve Data (Base Year Equals 2007)

As can be seen, the manufacturing sectors that are down the least from their peaks all reached those peaks sometime in 2012. However, just three of those sectors - food, computers and electronics, and motor vehicles and parts - are currently above their 2007 levels.

What's your reaction to this manufacturing data? Any thing surprise you? Let us know your thoughts at the Feedback section below.

Recent Feedback

Great article with useful data!

One suggestion: for clarity, use "offshoring" to mean work that was done here and then was sourced outside the country. Use "outsourcing" to mean work done by another company, wherever it is located.

Harry Moser
President
Reshoring Initiative
Nov, 28 2012