From SCDigest's On-Target E-Magazine
- Juy 21, 2014 -
Supply Chain News: How is US Manufacturing Doing Six Years after the Great Recession?
Total Manufacturing Output Almost Back to Peak 2007 Levels, but Progress Varies Widely by Sector
SCDigest Editorial Staff
The so-called "Great Recession" that started in early 2008 and reached bottom in most metrics a year and a half later, in June of 2009, hit the economy and US manufacturing very hard.
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Taken as a whole, computer and electronic products (we believe mostly the electronics component) are up a robust 50% over the base year - which probably surprises a lot of folks. |
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Since then, manufacturing has generally been cited as a consistent bright spot in a still somewhat wobbly US economy, with generally consistent positive numbers in the monthly Purchasing Managers Index from ISM and at least decent growth in manufacturing jobs.
As SCDigest editor Dan Gilmore noted last week, there is growing anecdotal evidence that some US manufacturers are deciding to bring production back home from China or deciding not to move existing production offshore to begin with, due to rising wages in China, "regional" manufacturing strategies, and more. (See Can Western Manufacturing Be Saved? Part 6).
But do the numbers really support that theory? This week, we take a look at overall manufacturing numbers as compiled by the Federal Reserve, as well the specific trajectories of about a half dozen individual manufacturing sectors, using our exclusive "supply chain web chart" technology.
Next week, we'll be back with analysis of another selection of industries.
The data overall and for each sector is in index form, with the base year for each being 2007, overall the peak year for US manufacturing. So, all numbers reflect the percent up or down over time (January, 1990 through June, 2014) from that base year. So, a score of 98 in a given month, for example, would mean production in that period was 2% below the 2007 average.
The good news of sorts is that overall, with a score of 99.7, US manufacturing output at last is on the cusp of reaching that peak 2007 level, some seven years later. Barring an unexpected downturn, the total index seems poised to hit or exceed the 100 level sometime over the next few months, and maybe as early as July.
Overall, as seen in the chart below, far from slumping since the early 2000s, as many believe, US output peeked in December of 2007. But output started dropping sharply almost immediately after that, as the recession began, reaching a bottom in June of 2009 at almost 19% below the 2007 average. Great Recession indeed.
That data is all in the chart below. Note you can mouse over the chart to see individual data points and also you change the time view of the data.
Now let's look at some specific sectors. The index values are all relative to that sector's 2007 output, which while was the overall peak for US manufacturing, it certainly may not have been the peak year for that sector, as can be seen in index values well over 100 in many sectors in earlier or later years.
The general consumer goods sector has recovered a little bit more slowly than overall output, with production still 2.8% below 2007 totals.
(Manufacturing Article Continued Below)
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