We're back with some new web charts, this week focused on US manufacturing - quite the hot topic at the moment.
We've published charts on this at times before, but never together like this, and also not using our new web charting technology.
We start with US manufacturing output from 1990 to the present (June data). All data in these charts come from monthly reports from the Federal Reserve. This index is based on the year 2007, which was given an average score of 100. This means the index indicates changes in output from that base year. In other words, the June score of 95.8 is still 4.2% below 2007 levels.
Importantly, this chart and data represent manufactuting only. The full Industrial Output index often cited in the media headlines also includes mining and utilities. This is a a crtitical distinction, because those two sectors tend to far less volatile than manufacturing itself.
As can be seen, the drop in production began in earnest in early 2008, nine months before the financial crisis starting in September that most of us associate with the Great Recession. By June 2009, it had dropped an incredible 20% from 2007 levels.
That steep drop is why even with steady growth from the bottom mark, and manufacturing being a bright spot in the overall economy, the US is still well short of 2007 output levels.
Also, the graphic probably tells a bit of a different tale than most would expect about US manufacturing. Output actually has been continuing to grow despite all the offshoring to China and elsewhere. However, the rate has slowed over the past decade or so, although the recession in the 2001 time frame needs to be factored in.
Regardless, manufacturing output grew about 58% during the 1990s, and then grew just a little over 12% from to 2000 to the peak in January of 2008. The growth since 2000 given today's levels is actually just 7.8%.
The second chart shows both total US manufacturing capacity as well as factory utilization percentages over the same period. As can be seen - and surprising to us - total capacity dropped by only single digit percentages during the Great Recession, even as utilization rates fell to lows not seen since the 1930s. If fact, that in a sense drove the utilization rate lower, as more shuttered capacity would have sctually moderated the utilization decline.
Capacity now is 5.3% from the peak in April, 2008, while utlization at 77.7% is less than 2 percentage points below its long run average, but still well off then mid-80% levels seen for much of the 1990s.
Any other insights? Play around with the chart, and let us know what you find!