Wednesday, October 17, 2018

Manufacturing Growth Up

Trade and manufacturing have been big political battlegrounds recently.  So I thought I would look at the number of manufacturing jobs generated by year and found a few interesting things.  By one measure, 2017-2018 has seen the strongest growth in manufacturing jobs since the 1990s.

The change in the number of manufacturing jobs from month to month is very noisy (there might be a big swing up followed by a decline in the next month).  Also, we are months away from having data on 2018 as a whole.  So, in the chart below, I look at the percentage change in manufacturing jobs year over year, by month (so, for instance, how much the number of manufacturing jobs changes from June of one year to June of the next).

This chart shows how miserable manufacturing-job numbers were from from 2000 until early 2010; within that period, the number of manufacturing jobs was either treading water or sinking in almost every twelve-month interval.  Starting in April of 2010, the U.S. began actually to gain manufacturing jobs, and 2010 to the present has begun the slow process of trying to rebuild from the manufacturing collapse of 2000-2010 (we still have millions fewer manufacturing jobs now than in 2000).

Another thing stands out in this chart: Starting in May of 2018, the United States began having a year-over-year growth of manufacturing jobs of over 2 percent.  From May of 2017 to May of 2018, it was around 2.1 percent; from June of 2017 to June of 2018, it was 2.2 percent (and so forth).  As this chart suggests, the last time the United States experienced this kind of manufacturing-job growth was in the mid-90s.

Looking a little closer at the past few years reveals something else.
By early 2017, the rate of job growth in manufacturing had begun to slip.  In fact, manufacturing jobs were lost in half the months of 2016, and there were fewer manufacturing jobs in December 2016 than there were in January of that year.  This changed in 2017; since January of 2017, there has been only one month of job loss in manufacturing, and the overall growth has been much more vigorous.

A few provisional thoughts arise from this:
  • Manufacturing was already on an overall upswing when Donald Trump became president.
  • But it had begun to decline at the end of the Obama administration, so it's not clear that Trump inherited the best manufacturing growth from Obama.
  • Manufacturing has grown at a relatively aggressive rate in the past 18 months, at a pace unmatched in the past 20 years.
  • The continued strong rate of manufacturing growth in 2018 suggests that the current trade negotiations between the United States and many its principal trading partners has not yet inflicted great pain on the manufacturing sector's employment picture as a whole. (This is distinct from its effect on other employment sectors.)
(The underlying data for these graphs come from FRED; the calculations are my own.)