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Manufacturing surprising bright spot in US Economy


Staff member
Dec 15, 2000
January 5, 2012 New York Times
Manufacturing Is Surprising Bright Spot in U.S. Economy

For the first time in many years, manufacturing stands out as an area of strength in the American economy.

When the Labor Department reports December employment numbers on Friday, it is expected that manufacturing companies will have added jobs in two consecutive years. Until last year, there had not been a single year when manufacturing employment rose since 1997.

And this week the Institute for Supply Management, which has been surveying American manufacturers since 1948, reported that its employment index for December was 55.1, the highest reading since June. Any number above 50 indicates that more companies say they are hiring than say they are reducing employment.

There were new signs Thursday that the overall jobs climate was improving, as the Labor Department reported that new claims for unemployment benefits fell last week and a payroll company’s report showed strong growth in private-sector jobs in December.

As stores have filled with inexpensive imports from China and other Asian countries, the perception has risen that the United States no longer makes much of anything. Certainly there has been a long decline in manufacturing employment, which peaked in 1979 at 19.6 million workers. Now even with hiring over the last two years, the figure is 11.8 million, a decline of 40 percent from the high.

But those numbers obscure the fact that the United States remains a manufacturing power, albeit one that has been forced to specialize in higher-value items because its labor costs are far above those in Asia. The value of American manufactured exports over a 12-month period peaked at $1.095 trillion in the summer of 2008, just before the credit crisis caused world trade volumes to plunge. At the low, the 12-month figure fell below $800 billion, but it has since climbed back to $1.074 trillion. Those figures are not adjusted for inflation.

In total exports, including manufactured goods as well as other commodities like agricultural products, the United States ranked second in the world in 2010, behind China but just ahead of Germany. For the first 10 months of 2011, Germany is slightly ahead of the United States.

The United States is particularly strong in machinery, chemicals and transportation equipment, which together make up nearly half of the exports. Exports of computers and electronic products are growing, but are well below their precrisis levels. Production of cheaper computers and parts shifted to Asia long ago.

Just how long the rise in manufactured exports can last depends, in part, on the health of other economies. The euro zone no longer takes as large a share of American exports as it once did, but it is still a major customer. A recession there this year, as has been widely forecast, would hurt all major exporters, including the United States.

Similarly, the strong exports provide a stark reminder of how vulnerable this country could be to protectionist trade wars. The Doha round of world trade talks, which was supposed to result in the lowering of more trade barriers, has stalled. And last month China imposed punitive duties on imports of American large cars and sport utility vehicles, which total about $4 billion a year.

That move was seen as retaliation for United States requests that the World Trade Organization rule that Chinese subsidies for its solar and poultry industries violated international law. The Chinese denounced those requests as protectionist.

The American government denies that, of course. “Part of a foundation of a rules-based system is dispute settlement," said Ron Kirk, the United States trade representative, in an interview with Reuters after the Chinese announced the new tariffs. "That’s what we think is so important about the W.T.O. How China reacts to that is up to China. But I just cannot buy into the argument that our standing and protecting the rights of our exporters and workers is somehow igniting a trade war or being protectionist.”

Since employment in the United States hit its recent low, in February 2010, the economy has added 2.4 million jobs through November, of which 302,000 were in manufacturing. With government payrolls shrinking, and financial services jobs also lower, manufacturing employment has played an important role in keeping the economy growing. It also is helping that construction employment appears to have hit bottom. In the first 11 months of 2011, it is up a small amount.

To be sure, the gains in manufacturing employment and exports have come after sharp declines during the recession and credit crisis. There are still 6 percent fewer manufacturing jobs than there were when President Obama took office at the beginning of 2009, and it seems very unlikely that he will be the first president since Bill Clinton, in his first term, to preside over growing manufacturing employment during a four-year term.

During George W. Bush’s two terms, the number of manufacturing jobs fell by 17 percent in the first four years and by 12 percent in the following four years. The number declined by 1 percent in Mr. Clinton’s second term.

The Institute for Supply Management survey of manufacturers has shown more companies planning to hire than to fire in every month since October 2009. That string of 27 months is the longest such string since 1972, but remains well behind the longest one, 36 months, which ended in December 1966.

Over all, that survey has indicated that a plurality of companies has believed business is getting better for 29 consecutive months, and December’s reading of 53.9 was the strongest since June.

This summer, one widely watched part of the I.S.M. survey showed that a small plurality of companies reported new orders were falling, a fact that helped to stimulate talk of a double-dip recession. But the latest reading, of 57.6, indicates widespread strength in new orders.

In an economy where there is widespread concern over consumer spending, and in which government spending and payrolls are under heavy pressure, manufacturing has become a bright spot. It is not enough to produce a strong rebound, and it remains vulnerable to weakness overseas. But it has helped to keep a weak economic recovery from turning into a new recession.

Floyd Norris comments on finance and the economy at nytimes.com/economix.
Indeed -- I'm seeing a bunch of indications that we're seeing the light at the end of the tunnel. :cheers:
I REALLY want to believe in the story you post. I hope like hell the numbers are correct.

But the truth is that I can't believe the numbers from this administration. Time after time the numbers have been "revised" two weeks later, after the splash on the twenty four hour news cycle.

I trully hope that there are vast new numbers of manufacturers out there getting loans from the banks (that have no money), creating all of these jobs, that nobody knows anyone getting. (how's that for a run-on sentence?)

Can any of you point to a single employer who has hired more than twenty five workers for a manufacturing business in the last month?

I smell a re-election effort on the part of the media. They could have at least waited a week to throw off the scent.:rolleyes5:
I REALLY want to believe in the story you post. I hope like hell the numbers are correct.

But the truth is that I can't believe the numbers from this administration. Time after time the numbers have been "revised" two weeks later, after the splash on the twenty four hour news cycle.

Very true. I saw a frustrating commentary from a DNC strategist (I have no idea how "official" he was) indicating that he was worried that the economy might be recovering too fast -- that ideally the economy would peak in the Summer, right before the elections. :skep:

Someone needs to take that boy out back with a rubber hose...
We are almost back to our mid-2007 employment levels. Would be nice to have another skilled machinist and a couple of more engineers . . . but it is tough to keep bringing people on when you aren't sure whether or not you are going to be able to keep them a year from now.

2012 is shaping up to be a good year for us.
Can any of you point to a single employer who has hired more than twenty five workers for a manufacturing business in the last month?

8 in December...and NO ONE hires in December.
Looking for a full night shift of 20 or so.

Back to '07 and looking for 50% above that this year. We are out of floor space to build shit.
Just remember, McDonald's (MCD) is a Manufacturer.

Industries at a Glance: Food Manufacturing: NAICS 311

Hedonistics: Its not who casts the votes, so much as who counts them, that matters.

I have to agree here. I hope there is a manufacturing turn around but at the same time I am not very optimistic. I have clients that plan to send a large portion of their work overseas this year. Moog is putting all of their Buffalo New York’s Commercial aircraft components in Baguio Philippines; Chiron America is moving part of their ops to Spain, ECT. Manufacturing may be coming back in America but I don’t believe it is going to be what we expect. More and more schools are dropping Industrial arts classes in favor of language classes. Reason I point this out is this year was my sons freshman year and when I looked at his schedule there was no Machine shop!!!!:eek: I asked why He didn’t take some type of trade class he told me there was none offered. However they now offer. Japanese, Cantonese, German, French, and of course Spanish. The Industrial arts building is now Language arts! First thing I do I call the county school so I could switch from city and I find the same thing! I did find out they do offer home economics. If the country is going to make a manufacturing comeback who will do the manufacturing?

Excite News - Nation adds 200,000 jobs in December hiring surge

WASHINGTON (AP) - Four painful years after the Great Recession struck and wiped out 8.7 million jobs, the United States may finally be in an elusive pattern known as a virtuous cycle - an escalating loop of hiring and spending.
The nation added 200,000 jobs in December in a burst of hiring that drove the unemployment rate down two notches to 8.5 percent, its lowest in almost three years, and led economists to conclude that the improvement in the job market might just last.

It was the sixth month in a row that the economy added at least 100,000 jobs, the longest streak since 2006. The economy added jobs every month last year, the first time that has happened since 2005.

And the unemployment rate, which peaked at 10 percent in October 2009 and stood at 9.1 percent in August, has fallen four months straight. It was 8.7 percent in November.

If economics textbooks and the best hopes of millions of unemployed Americans are confirmed, the virtuous cycle may be under way, which would suggest the job market will continue to strengthen.
I'm not disputing any of the info, and I think its great that maybe things are turning around, but what has really changed? I mean, why is the economy improving? What.. everybody buying more shit and more expensive groceries with less money? Everybody deciding right now to go buy a new car or truck, I don't get it?:confused:
Turning the corner? I think not. More like whistling by the graveyard.

Lest we not forget, US Government debt outstanding increased by 1.2 Trillion in 2011. With much of this credit flowing in from overseas, especially due to the crisis in Europe, this is essentially a continuous stimulus to the economy. That money ALL gets spent...and flows into the the economy. That is roughly 8% if GDP! If the underlying situation were at all healthy...the economy would be going bonkers right now.

What would happen if we lost the ability to borrow all this money at low rates?

How much longer can the US Gov borrow and spend 8% of GDP...without losing the ability to borrow cheaply?

What if Ron Paul gets elected, and balances the budget in one year? (OK...neither of those will happen...)

Easy...just instantly suck 1.2 trillion out the economy. Money supply will collapse...and we will instantly be in a depression.

At 8% of GDP...we probably have about 3-4 years more of this...before we are the new Greece. First goes Europe...then Japan...then the US. I don't actually think we make it the 3-4 years. There are WAY to many black swans circling out there.

We are essentially in the eye of the storm right now. Private debt to GDP in the US is in freefall..and THAT is what the Government debt is trying to plug with the huge deficits....but it wont work. The flight of capital to the US due to problems in Europe is giving the US the rope to hang itself. All this capital flowing in WILL reverse once the restructuring gets well underway. The normalcy bias in the US is simply absurd. The magnitude of the manipulation that has gone on just to hold things together has been staggering...and in reality...most metrics are still below 2008 levels. So basically...we are in a boat...at the edge of a waterfall....rowing as fast as we can. We have no water...no food...it is 3 miles upstream till we can take out. We just pulled about a foot farther upstream...and we are pronouncing that all is finally well. I dont think we can row the 3 miles...
Despite what the economics establishment would have you believe, one of the most important economic metrics is private credit/debt growth...and total credit/debt growth. Just looking at US Gov debt by itself is meaning less. Here is a chart made directly from US Federal Reserve Flow of Funds Data. Draw your own conclusions.


That purple line is the collapse in the private sector due to deleveraging. The Red is the US Gov trying to paper the hole over. The last time private debt levels rose to unsustainable levels and then collapsed was 1929...and private debt fell from 1929-1946. There is ZERO chance that private sector debt levels will stabilize. They are going to drop clear down to less than 100% of GDP. So the question is...how long can we keep plugging the hole.

Ask yourself this. What would the US 10 year not yield if you were required to hold to maturity? Low rates are not a verdict by the markets that the US is a good risk. Low rates are a sign of a momentum trade. All these holders of US debt expecting a greater fool to bail them out. You think the housing bubble was dangerous...this one is 10x more risky.

This chart also shows how absurd all the jawboning (PRIOR to 2008) over the US Gov debt was. Relative to GDP...US Gov debt has been pretty tame...up till 2008. Look at that surge however.... We are truly in never never land here. It is NOT business as normal.
To Shooter7...so if mfg. in general SLOWED/STOPPED hiring and expanding, that would be good, HOW!?!?!?!?!

Things in the BIG picture are not great, no doubt! BUT, mfg'ers doing all the business they can sure shouldn't HURT the U.S. economy! Normally I am a "Doom and Gloom" type of guy, but any good news about the economy is very welcome by me!

I saw a similar report here last night, more US jobs the last couple months and unemployment down a bit apparently, while the opposite is happening here in Canada.
Unfortunately most being hired its for a fair bit less $ than the last time they worked 2-3 yrs ago so there is still a lot of readjustment to go on in what we can expect in our life time, its not gonna solve all the problems with your budget and housing industry anytime soon. As to how in the world they're still selling that many new cars in the US, very odd, that 7-8yr financing must be helping.

Gotta say from everything I've seen on the news from other countries the last year, its hard for the US or Canada to really look that bad when you look at the rest of the world, man there's a lot of shit hole countries out there to make us look good, and that's being nice about it, and for the few other decent ones, they're generally surrounded by shit countries anyway or about to turn into one, sure some may have a nice view here and there for tourists, but beyond that, assuming you don't get shot in your vacation, you know you wouldn't wanna live there no matter how bad things could be here in north america, we're still doing pretty damn awesome, hopefully we can manage to preserve that somewhat as time goes on if we can get a few a-holes at the top in check.
To Shooter7...so if mfg. in general SLOWED/STOPPED hiring and expanding, that would be good, HOW!?!?!?!?!

Things in the BIG picture are not great, no doubt! BUT, mfg'ers doing all the business they can sure shouldn't HURT the U.S. economy! Normally I am a "Doom and Gloom" type of guy, but any good news about the economy is very welcome by me!

I am thinkin shooter is a replick planted silver tongue devil

Guys, don't make the mistake of assuming Shooter is another shill for the far right. He's just saying that some growth in employment doesn't mean we're out of the woods on an overall basis, and he's trying to present factual reasons to back up what he's saying. The economic stuff he presents is somewhat complicated to try to understand, but it is based on actual numbers.

His data is showing Americans are shedding debt on an individual basis by paying off loans, credit cards, etc, and the government's deficit spending is making up for this lack of consumer spending to a large degree. Making up for it, but at the same time hiding it to a degree that makes it not obvious to the casual looker. Problem is, if we have deficit spending equal to 8% of GDP on an ongoing basis, we'd add additional debt equal to the GDP in another 12 yrs, or actually less time than that when you figure in the effects of compounding plus the amounts of actual revenue that's going to be consumed by interest on the current debt plus the future additions to the debt.

Read Shooter's first post where he started the thread "The Baffling Reaction to OWS" and you'll see very quickly that he's not here to defend the bullshit that's wrecking the country. Shooter says he's a conservative/libertarian, but the things he's posted here on PM show him to be a legitimate fiscal conservative rather than the so-called conservative who thinks he's a conservative because his every thought is controlled by Fox, Limbaugh, the Tea Party, or some combination of the above.

I'd imagine Shooter is as happy to see additional employment growth in mfg as any of the rest of us are. But, he's looking at the whole situation critically, and cautioning us to not be fooled by sunshine pumping gov't mouthpieces who might try to convince us happy days are here again and everything's gonna be fine in a few months, cause it just ain't so. Reasonable advice, IMO, from a man who's obviously thinking and using facts to make his point.
Trouble is, metalmuncher, is that anyone who makes any comment about being fiscally conservative, is soon labeled as a wingnut, seeking to push granny over the cliff in her wheelchair, by the usual "gang of idiots". Automatically being deemed a racist, misogynistic, homophobe, anti-union pro-life nut-case Evangelical.