Industrial Sector Far From Dead
Labor Day celebrates the contributions working men and women have made to America, and at least as important, to American families. The hard work, dedication and ingenuity of our nation’s workforce is celebrated – and envied – throughout the world.
But for many years, we Americans have been told manufacturing, the business endeavor that made our nation an economic giant, was either dead or dying.
Other types of business were the wave of the future, we were assured. Workers – and investors – who stuck with the dinosaur called manufacturing were foolish, we were warned.
Wrong. American manufacturers indeed face serious challenges. But in an important way, they are leading the economy’s recovery.
Among the most meaningful ways of analyzing an economy’s performance is productivity. That is, how much value is created by a human being’s work.
Three major sectors of the U.S. economy monitored by the Bureau of Labor Statistics are business in general, nonfarm business and manufacturing.
For the past 10 years, productivity growth in the nonfarm business sector has been at an annual rate of 3.3 percent or below. Last year the rate of growth was 1.5 percent. During the first quarter of this year, productivity in that sector actually slipped by 1.5 percent before rebounding to nine-tenths of 1 percent in the second quarter.
During the same period, productivity in the general business sector was nearly the same. Last year it grew by 1.4 percent. During this year’s first and second quarters, growth improved by only four-tenths of 1 percent and seven-tenths of 1 percent, respectively.
But manufacturing was different. In 2010, productivity there increased by 6.3 percent, then went to 1 percent in 2011 and 1.8 percent last year. During this year’s first quarter, manufacturers enjoyed a 3.9 percent productivity boost, followed by 2.7 percent for the second quarter.
But what about making money? Isn’t the services sector where the real action is? Judge for yourself: Last year, gross domestic product in the U.S. service industry rose by 2.4 percent. Growth in the goods-producing sector – that’s manufacturing – was 4.7 percent.
Manufacturing is not dead in the United States. Far from it. This Labor Day, that’s something to celebrate.
Myer can be reached at: email@example.com.