It is surprisingly hot and sticky in DC today, as summer seems to be making an early return to the nation’s capital. And while that might make many Washingtonians cringe, when it comes to the economy, these descriptors are welcome news. A key dimension of America’s economic recovery is also surprisingly hot with strength that is expected to stick – manufacturing. Ok, cheesiness aside, U.S. factories and their workers struggled during the recession, but signs [3] now point in the opposite direction, with the manufacturing industry leading [4] the economic recovery. In terms of jobs, gains so far have been modest. Over the past year, about 200,000 jobs [5] have been added back to payrolls – a terrific increase, but still just a fraction of the more than 2 million jobs lost during the recession and the roughly 3.5 million jobs lost under the previous administration in the years leading up to the recession.
Still, there is good reason to be happy about the prospects for the manufacturing sector, particularly given the role exports are playing in boosting the industry, thanks in part to the Obama Administration and specifically the U.S. Commerce Department’s focus on growing exports under the National Export Initiative (NEI). The 200,000 jobs added in the past year have been concentrated in the durable goods sector, whose advance report on shipments and new orders for April will be released [6] this Wednesday. Exports of durable manufactured goods have jumped 13.1 percent over the year, with exports accounting for roughly 37 percent of the growth in shipments over the past year. As the figure below highlights, all major industries (3-digit NAICS [7] industries for readers in the data business) have enjoyed export growth.
Not surprisingly, many of the largest industries are the ones with the largest dollar growth in exports. Primary metals, a smaller industry with exports that are up by nearly one-third or $1.3 billion over the year, is one of the exceptions. Although its export growth was slightly less dramatic (17 percent or $0.4 billion), fabricated metal products alone helped create 74,000 jobs over the last year. This little-known fact is a welcome reminder of the importance of American heavy metal … the steel-banging kind. Both industries also have close ties to the resurgent transportation equipment sector, which has seen an increase in employment of 33,000 jobs as exports have risen by $1.7 billion. There also is good reason to expect continued growth in goods exports, as the Institute for Supply Management’s new export orders index [8] has shown 22 straight months of growing overseas demand for U.S. manufactured goods.
The only industries that have continued to experience job losses have been wood products, furniture, and non-metallic mineral products, none of which are particularly export oriented; perhaps more importantly, all are dependent in some way on the still anemic, but hopefully soon-to-improve, housing sector. Export growth is unlikely to be the motor behind their recovery.
Still, when the value of new durable goods orders for April is revealed on Wednesday, bear in mind the following:
1) How important our country’s trade ties are to our sustained economic recovery, and
2) What the “Made in U.S.A.” logo means both to American workers who define it and U.S. and foreign buyers who want it.
~Mark Doms, Chief Economist, U.S. Department of Commerce
May 23, 2011
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