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Manufacturing: A New Commerce Department Report Shows Renewed Expansion

Guest blog post by Dr.Sue Helper, Chief Economist, U.S. Department of Commerce

The U.S. manufacturing sector is rebounding at a rate unseen since the late 1990s.  For the first time in more than a decade, output and employment are steadily and simultaneously increasing. A new Commerce Department report, Manufacturing Since the Great Recession, provides an overview of the resurgence of this important economic sector, examining production, international trade and the labor market.

Some of the key findings included in the report are:

  • Manufacturing output has grown 38 percent since the second quarter of 2009 when the Great Recession ended, and accounts for 19 percent of the rise in real gross domestic product (GDP) since that time;
  • From March 2010 through May 2014, the manufacturing sector has added 646,000 jobs with an additional 243,000 positions yet to be filled. This is more than a cyclical rebound; the US has gained about four times as many manufacturing jobs since 2009 as would be expected from cyclical factors alone; and,
  • In 2013, average annual weekly hours for production workers in the manufacturing sector were at their highest level since the mid-1940s.

Manufacturing jobs are good jobs: workers earn 16 percent more in manufacturing jobs (in combined wages and benefits) than they would elsewhere. Not surprisingly, quit rates are also lower than in any non-government sector.

It should be noted that manufacturing continues to face significant challenges. The large and growing foreign trade deficit is a substantial issue.  Additionally, gains in manufacturing job growth are small compared with the total number lost during the last decade.  To overcome these obstacles, the Obama Administration is committed to a number of initiatives to expand manufacturing in the U.S. One example of this is the National Network for Manufacturing Innovation (NNMI). The basic idea behind NNMI is to create “innovation ecosystems,” around the country. These regional centers for industry and academia—from large companies to their smallest suppliers, from major research institutions to community colleges—work together to make technological breakthroughs that will benefit a region’s manufacturing base, rather than just a single company.

Here at the Commerce Department, we are also doing our part to ensure continued growth of this critical sector. On May 28th, 2014, Commerce Secretary Penny Pritzker announced the first 12 “Manufacturing Communities” as part of a multi-agency designation led by the Commerce Department, through a new program called the Investing in Manufacturing Community Partnership (IMCP). IMCP aims to accelerate the resurgence of manufacturing in American communities by encouraging them to create long-term economic development strategies that strengthen manufacturing eco-systems.

Moreover, President Obama has made encouraging insourcing and investment in the U.S. from both domestic and foreign-domiciled firms, a key pillar of his overall manufacturing agenda.  

Last summer, Former National Economic Council Director Gene Sperling characterized this expansion as a “manufacturing renaissance.” Today’s report highlights broad evidence that the renaissance continues to unfold.  Gains in production and jobs that might have seemed wishful thinking just a few years ago have now come to fruition.

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