Manufacturing on the mend?

[Ban my account ffs!]

http://www.startribune.com/business/80618947.html?elr=KArksLckD8EQDUoaEyqyP4O:DW3ckUiD3aPc:_Yyc:aUUsZ

The ISM manufacturing index rose to 55.9 in December compared to 53.6 in November.  A reading above 50 indicates growth in the sector.

Unfortunately, the construction sector is still in decline.  Despite large infusions of federal money into construction projects, reductions in state and local spending have canceled much of that out.

The brightest spot of the report was the index for new orders, a signal of future production, skyrocketed to 65.5 from 60.3 in November.  This would be the highest reading in the index in at least a decade, well ahead of the previous peak of 61.4 seen in May 2004.  This is in contrast to a reading of 32.9 in December of 2008.

I really hope this means a big resurgence in manufacturing.  Our country needs to actually produce something besides just information!

[Swing low, sweet chariot. Comin' for to carry me home.]

I really hope this means a big resurgence in manufacturing.  Our country needs to actually produce something besides just information!

"The most valuable commodity I know of is information.  Wouldn't you agree?"

[Ban my account ffs!]

I really hope this means a big resurgence in manufacturing.  Our country needs to actually produce something besides just information!

"The most valuable commodity I know of is information.  Wouldn't you agree?"

So we should abandon manufacturing in the pursuit of a purely information-based economy?

That's nice... but not practical.

As it stands, there is enough inequality in the world economically to make it economical to ship jobs overseas and let people make our products for a penance and ship them to the U.S...

But in a truly globalized world, those inequalities will largely disappear and it will fall on the nations with the most resources and efficient workforce to create those products.

We should be modernizing our manufacturing facilities for the 21st century, not abandoning them for some foolhardy belief that the current global economic climate will remain this way forever... eventually we will run out of sources of cheap labor (though I think shipping costs will rise astronomically before that truly happens)

[Swing low, sweet chariot. Comin' for to carry me home.]

it was a quote from a movie, nothing more

[Filuwaúrdjan]

There's been some good news on this front from Britain recently as well. But it's early days.

[Southern Senator North Carolina Yankee]

The ISM manufacturing index has eclipsed 50 every month except one since August.

http://www.startribune.com/business/80618947.html?elr=KArksLckD8EQDUoaEyqyP4O:DW3ckUiD3aPc:_Yyc:aUUsZ

The ISM manufacturing index rose to 55.9 in December compared to 53.6 in November.  A reading above 50 indicates growth in the sector.

Unfortunately, the construction sector is still in decline.  Despite large infusions of federal money into construction projects, reductions in state and local spending have canceled much of that out.

The brightest spot of the report was the index for new orders, a signal of future production, skyrocketed to 65.5 from 60.3 in November.  This would be the highest reading in the index in at least a decade, well ahead of the previous peak of 61.4 seen in May 2004.  This is in contrast to a reading of 32.9 in December of 2008.

I really hope this means a big resurgence in manufacturing.  Our country needs to actually produce something besides just information!

It doesn't mean that. It means manufacturing is expanding again but if you go back the ISM was above 50 indicating expansion in 2005, 2006 and even late 2007. Even in 2003. The height of outsourcing. Don't misread or read too much into these readings.

[phk]

I would like to point out that increases in actual manufacturing output shouldn't necessarily imply job creation. They don't have to track together with output. Its possible for output to grow while employment can either go up, down or stay the same.

The value of US manufacturing output is at an all-time high while employment in manufacturing is at levels not seen since 1941.

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[Ban my account ffs!]

That is true.. but even so, it has a positive impact on the economy.  Increasing domestic demand and international demand for American made products can benefit us in many ways even if it leads to only anemic job creation.

I'm not saying that's a good thing.. i"m just saying that if this means we might reduce our trade deficit some, it won't have been totally worthless.

[phk]

Graphs I found.

Manufacturing will slowly, yet surely end up the way agriculture has through increased productivity.

I wonder if such debates were occurring in the 1920s as people were afraid that the country's labor allocation toward agriculture was anemic and that manufacturing was impractical.

But I think regardless the US and the rest of the OECD are doing a poor job in moving up the value-added ladder in a fast manner. Many of industries like textiles, are for the most part now obviously third world industries if I must.  

[phk]

Addendum:


According to Table 9 of today's Federal Reserve report, the Gross Value of U.S. Manufacturing Output reached $2,776.5 (almost $3 trillion in billions of 2000 dollars, and close to $3.5 trillion in today's dollars) in January, the highest level since December of 2008. According to BLS data, there were 11,540,000 manufacturing workers in January, which means that on a per-worker basis, U.S. manufacturing output per worker was more than $240,000 in January (measured in 2000 dollars). Converted to today's dollars, that's about $300,000 in manufacturing output per U.S. worker, and the productivity of America's factory workers has doubled in less than two decades.

U.S. manufacturing is surging again by every measure (industrial production, ISM manufacturing, Empire State index, etc.), and yet that increased manufacturing output is being produced with fewer workers - about a million fewer than a year ago - raising U.S. manufacturing output per worker to the eye-popping level of $300,000 in January! Perhaps that's one positive outcome of an economic slowdown - it motivates companies to produce "more with less" as they are forced to focus on cost-saving efficiencies, resulting in the soaring productivity numbers reported here.

[Free Trade is managed by the invisible hand.]

I know that various outfits make a business out of producing advance estimates of GDP using a variety of measures, but I thought I’d just look at the historical relationship between industrial production and GDP growth (data since 1995):

Those big negatives on the lower left are the recent recession, with industrial production dragged down by massive inventory liquidation. Some of what we’re seeing now is just payback for that, and not an indication of broader growth. But even so, recent industrial growth suggests GDP growth of 4 percent or more.

If that’s right, and it continues, we should be seeing some job gains soon; the negative miracle of rapid growth without jobs can’t continue indefinitely.

So we may see some light in the near future.


This is an old blog post from paul krugman, and the title of the blog entry is "A smidgen of optimism".