Facts About Manufacturing

Manufacturing value-added output increased from $2.895 trillion at the annual rate in the fourth quarter to $2.905 trillion in the first quarter, an all-time high. Value-added output rose to a new record level in the first quarter for nondurable goods (up from $1.299 trillion to $1.312 trillion), but it slipped a bit from a record level for durable goods (down from $1.595 trillion to $1.593 trillion). Manufacturing accounted for 10.9% of value-added output in the U.S. economy in the first quarter. At the same time, real value-added output in the manufacturing sector decreased from $2.283 trillion at the annual rate in the fourth quarter to $2.252 trillion in the first quarter, as expressed in chained 2012 dollars. This figure remained lower than the record high in the fourth quarter of 2021, which was $2.325 trillion, suggesting that much of the gain in output since then has come from higher prices. (Source: Bureau of Economic Analysis)

Including indirect and induced impacts, for every $1.00 spent in manufacturing, there is a total impact of $2.60 to the overall U.S. economy. This figure represents one of the largest sectoral multipliers in the economy. In addition, for every one worker in manufacturing, 4.4 workers are added in the overall U.S. economy, including indirect and induced impacts, and for every $1.00 earned in direct labor income in the manufacturing sector, $3.75 in labor income earned is added to the overall U.S. economy. (Source: NAM calculations using 2021 IMPLAN data)

The majority of manufacturing firms in the United States are quite small. In 2020, there were 239,524 firms in the manufacturing sector, with all but 4,024 firms considered to be small (i.e., having fewer than 500 employees). In fact, 74.4% of these firms have fewer than 20 employees, and 93.1% have fewer than 100 employees. With that said, the bulk of employment comes from larger firms, with 58.4% of all employees in the sector working for firms with 500 or more employees. (Source: U.S. Census Bureau, Statistics of U.S. Businesses)

Manufacturing employment rose by 16,000 in August, the fastest monthly gain since October 2022. With that said, manufacturing employment growth has been more sluggish this year, with the sector adding just 23,000 workers through the first eight months of 2023. This compares to very strong growth of 385,000 and 390,000 manufacturing workers in 2021 and 2022, respectively. Encouragingly, there were 12,997,000 manufacturing workers in August, the most since November 2008. As such, total manufacturing employment has remained resilient despite a challenging economic environment in the sector, including weaker demand and production and an uncertain outlook.

At the same time, nonfarm payroll employment rose by 187,000 in August, up from a revised 157,000 in July. The U.S. economy has added 1,884,000 workers through the first eight months of 2023, a robust pace. Meanwhile, the labor force participation rate increased from 62.6% in July to 62.8% in August, the strongest reading since February 2020. At the same time, the number of employed workers increased to a record 161,484,000 in August. Yet, even with more people moving off of the sidelines and into the labor market, the unemployment rate rose from 3.5% in July to 3.8% in August, its highest point since February 2022. (Source: Bureau of Labor Statistics)

In 2021, manufacturing workers in the United States earned $95,990 on average, including pay and benefits. Workers in all private nonfarm industries earned $81,308 on average. Looking specifically at wages, the average hourly earnings of production and nonsupervisory workers in manufacturing rose 0.4% to $26.59 in August, with 5.7% growth over the past 12 months. This continues to point to a solid overall labor market, with wages rising very strongly despite signs that manufacturing hiring has softened year to date. For all manufacturing employees, average hourly earnings were $32.61 in August, up 5.0% year-over-year. (Sources: Bureau of Economic Analysis and Bureau of Labor Statistics)

Manufacturers have one of the highest percentages of workers who are eligible for health benefits provided by their employer. Indeed, 91% of manufacturing employees were eligible for health insurance benefits in 2022, according to the Kaiser Family Foundation. This is significantly higher than the 78% average for all firms. Of those who are eligible, 81% participate in their employer’s plans (i.e., the take-up rate). State and local government (89%), transportation, communications and utilities (85%) and finance (83%) had higher take-up rates in 2022. Meanwhile, the average annual cost of a family health care plan for a family of four in manufacturing was $21,852 in 2022. (Source: Kaiser Family Foundation)

There were 550,000 manufacturing job openings in July, the lowest level since January 2021. Even as the overall labor market remains solid, the number of job postings in the sector continues to cool notably. Yet, even with recent decelerations, manufacturing job openings remain above pre-pandemic levels. In 2018 and 2019, for instance, the average number of job openings in manufacturing was 466,000 and 437,000, respectively. In contrast, the averages were 820,000 and 853,000 in 2021 and 2022, respectively. In the larger economy, nonfarm business job openings eased from a downwardly revised 9,165,000 in June to 8,827,000 in July and the weakest reading since March 2021. At the same time, the 5,841,000 unemployed Americans reported in July translated into 66.2 unemployed workers for every 100 job openings in the U.S. economy. As such, there continued to be significantly more job openings than people actively looking for work, even as that ratio has narrowed significantly year to date. (Source: Bureau of Labor Statistics)

Over the next decade, 4 million manufacturing jobs will likely be needed, and 2.1 million are expected to go unfilled if we do not inspire more people to pursue modern manufacturing careers. Moreover, according to a recent report, the cost of those missing jobs could potentially total $1 trillion in 2030 alone. (Source: Deloitte and The Manufacturing Institute)

After weakening in 2019 and 2020 on trade policy and COVID-19 challenges, trade volumes rebounded in 2021 and 2022, with U.S.-manufactured goods exports hitting a new record level. In 2022, manufacturers in the United States exported $1,596.79 billion, with durable and nondurable goods exports also hitting all-times highs, at $970.97 billion and $625.82 billion, respectively. (Source: U.S. Commerce Department)

Manufactured goods exports have more than doubled over the past two decades. U.S.-manufactured goods exports totaled $622.31 billion in 2002, and in 2021, that figure is $1,399.17 billion, or 2.25 times larger. Nondurable goods exports have grown even faster over that time frame, up from $171.26 billion in 2002 to $521.10 in 2021, or 3.04 times larger. Meanwhile, durable goods exports have nearly doubled from $451.05 billion in 2002 to $878.07 billion to 2021. (Source: U.S. Commerce Department)

World trade in manufactured goods continued to expand rapidly, rising from $14.87 trillion in 2021 to $15.29 trillion in 2022. That figure has risen from $4.67 trillion in 2000 and $12.14 trillion in 2010. The U.S. share of world trade in manufactured goods was 7.8% in 2022. (Source: World Trade Organization)

Taken alone, manufacturing in the United States would be the eighth-largest economy in the world. With $2.50 trillion in value added from manufacturing in 2021, only seven other nations (including the U.S.) would rank higher in terms of their GDP. Those other nations with higher GDP in 2020 were (in order) the U.S., China, Japan, Germany, India, the United Kingdom and France. After manufacturing in the U.S., the next five economies would be Italy, Canada, South Korea, Russia and Australia, in that order. (Source: Bureau of Economic Analysis, International Monetary Fund)

Foreign direct investment in U.S. manufacturing reached a new record level in 2022. Overall, foreign direct investment has jumped from $756.87 billion in 2010 to $2,299.18 billion in 2021, a new record. The manufacturing sector comprised 42.4% of total foreign direct investment in 2022, as expressed on a historical cost basis. These data should continue to grow over the coming years, with the sector increasingly more competitive globally and with more companies reevaluating their supply chain and renewing their investments in the United States. (Source: Bureau of Economic Analysis)

Private manufacturing construction rose 1.1% to a record $200.99 billion in July. Private construction in the sector has trended significantly higher since bottoming out at $72.46 billion in February 2021. Over the past 12 months, activity has risen a whopping 71.4%. The data speak to the very sizable investments being made in the manufacturing sector, with firms strongly expanding their capacity to meet their long-term objectives. This should bode well for future growth in manufacturing in the U.S. moving forward. (Source: U.S. Census Bureau)

U.S. affiliates of foreign multinational enterprises employed more than 2.8 million manufacturing workers in the United States in 2020, or roughly 21.8% of total employment in the sector. In 2020, the most recent year with data, manufacturing sectors with the largest employment from foreign multinationals included motor vehicles and parts (512,300), chemicals (420,300, including 221,300 in pharmaceuticals and medicines), food (345,000), machinery (239,200), other manufacturing (223,200) and computers and electronic products (203,400). Total compensation in the manufacturing sectors from these affiliates was $270.1 billion, and those entities spent $51.1 billion in research and development. (Source: Bureau of Economic Analysis)

Manufacturers in the United States perform 55.2% of all private-sector R&D in the nation, driving more innovation than any other sector. R&D in the manufacturing sector has risen from $132.5 billion in 2000 to $347.4 billion in 2021. In the most recent data, pharmaceuticals accounted for 34.1% of all manufacturing R&D, spending $118.4 billion in 2020. Computer and electronic products (15.5% of manufacturing R&D), semiconductor and other electronic components (14.4%) and motor vehicles and parts (8.0%) also contributed significantly to R&D spending in 2021. (Source: Bureau of Economic Analysis)

Manufacturers consume one-third of the nation’s energy. Industrial users consumed 33.25 quadrillion Btu of energy in 2022, or 33.5% of the total. Moreover, the U.S. Energy Information Administration estimates that industrial users will consume 34.21 quadrillion Btu of energy in 2030, or 2.9% more than in 2022. (Source: U.S. Energy Information Administration, Annual Energy Outlook 2023)

The cost of federal regulations falls disproportionately on manufacturers, particularly those that are smaller. Manufacturers pay $19,564 per employee on average to comply with federal regulations, or nearly double the $9,991 per employee costs borne by all firms as a whole. In addition, small manufacturers with fewer than 50 employees spend 2.5 times the amount of large manufacturers. Environmental regulations account for 90% of the difference in compliance costs between manufacturers and the average firm.