Manufacturing value-added output increased from $2.768 trillion in the second quarter to $2.809 trillion in the third quarter, an all-time high. Value-added output rose to new record levels in the third quarter for both durable goods (up from $1.503 trillion to $1.544 trillion) and nondurable goods (edging up from $1.2650 trillion to $1.2653 trillion). Manufacturing accounted for 10.9% of value-added output in the U.S. economy in the third quarter, down from 11.0% in the second quarter. With that said, real value-added output in the manufacturing sector inched up from $2.256 trillion in the second quarter to $2.259 trillion in the third quarter, as expressed in chained 2012 dollars. This remained lower than the record high in the fourth quarter of 2021, which was $2.325 trillion. Indeed, much of the gain in output was buoyed by higher prices. (Source: Bureau of Economic Analysis)
The Top 18 Facts You Need to Know
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 2019, there were 243,687 firms in the manufacturing sector, with all but 4,036 firms considered to be small (i.e., having fewer than 500 employees). In fact, 74.3% of these firms have fewer than 20 employees, and 87.7% have fewer than 50 employees. With that said, the bulk of employment comes from larger firms, with 57.9% 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 increased by 8,000 for the second straight month in December. Despite some cooling toward the end of the year, the labor market remained a bright spot in the economy. In 2022, the sector hired 379,000 workers, building on the 365,000 workers added in 2021 and the most of any year since 1994. Cumulative growth in manufacturing employment in 2021 and 2022 was the best since 1983 and 1984. Currently, the manufacturing sector has 12,934,000 employees, the most since November 2008.
Meanwhile, nonfarm payroll employment increased by 223,000 in December, easing from 256,000 in November and remaining a solid figure. The U.S. economy added a healthy 4,503,000 net new employees in 2022. The unemployment rate dropped from 3.7% in November to 3.5% in December, with the labor market continuing to reflect “full employment” in the U.S. economy. The participation rate inched up from 62.2% to 62.3% but remained below pre-pandemic levels, with 63.4% in February 2020. The “real unemployment rate”—a term that refers to those marginally attached to the workforce, including discouraged workers and the underemployed—edged down from 6.7% to 6.5%, a new record low for the series dating to January 1994. (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, average hourly earnings of production and nonsupervisory workers in manufacturing rose 0.3% to $25.61 in December, up 5.0% from one year ago, continuing to be a highly elevated pace despite some easing from earlier in the year. For their part, manufacturers continued to cite difficulties in attracting and retaining workers. For all manufacturing employees, average hourly earnings were $31.36 in December 2022, up 3.7% from $30.35 one year earlier. (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)
Manufacturing reported 779,000 job openings in November. Over the past 12 months, job openings in the sector have averaged nearly 837,000, remaining well above pre-pandemic levels. Manufacturers hired 402,000 workers in November, down from 434,000 in October, with reduced activity for both durable and nondurable goods firms. Total separations rose from 388,000 to 393,000 for the month. As a result, net hiring (or hiring minus separations) totaled 9,000 in November, the slowest monthly gain since April 2021. Yet, net hiring has averaged more than 27,000 over the past 12 months, a solid reading.
Total quits in the manufacturing sector were little changed, edging down from 271,000 in October to 269,000 in November. The number of manufacturing quits has eased since peaking at a record 362,000 in March. While overall quits in the sector have cooled, there continued to be a high degree of labor market churn. At the same time, total quits in the overall economy increased from 4,047,000 to 4,173,000, a three-month high. Total quits in the U.S. economy peaked in November 2021 at 4,510,000, representing some easing over the past year even as the pace remained well above what was seen before the pandemic.
In the larger economy, nonfarm business job openings cooled from 10,512,000 in October to 10,458,000 in November, a pace that remains quite elevated. Meanwhile, there were 6,011,000 unemployed Americans in November, which translated into 57.5 unemployed workers for every 100 job openings in the U.S. economy. As such, there continued to be more job openings than people actively looking for work. (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, with U.S.-manufactured goods exports approaching 2018 levels. In 2021, manufacturers in the United States exported $1,399.17 billion, which was not far from the $1,399.75 billion seen in 2018 and up from $1,368.61 billion and $1,171.46 billion in 2019 and 2020, respectively. Moreover, it was not far from the all-time high reached in 2014, which was $1,403.78 billion. Durable goods exports totaled $878.07 billion in 2021, up from $761.06 billion in 2020. This was down from the record pace set in 2018, however, which was $923.74 billion. At the same time, there were $521.10 billion in nondurable goods exports in 2021, a new record and up from $410.40 billion in 2020. (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 was $13.01 trillion in 2018, a new record, but pulled back in 2019 and 2020 amid trade policy and COVID-19 challenges. Total manufactured goods trade was $12.75 trillion and $12.13 trillion in 2019 and 2020, respectively. With that said, volumes have risen 2.59 times from the pace seen in 2000, which was $4.69 trillion. The U.S. share of world trade in manufactured goods was 7.5% in 2020. (Source: World Trade Organization)
World trade in manufactured goods has more than doubled between 2000 and 2017—from $4.8 trillion to $12.2 trillion. The U.S. share of world trade in manufactured goods has grown from 7.6% in 2002 to 8.7% in 2017. (Source: World Trade Organization)
Taken alone, manufacturing in the United States would be the eighth-largest economy in the world. With $2.24 trillion in value added from manufacturing in 2020, 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, the United Kingdom, India and France. After manufacturing in the U.S., the next five economies would be Italy, Canada, South Korea, Russia and Brazil, in that order. (Source: Bureau of Economic Analysis, International Monetary Fund)
Foreign direct investment in U.S. manufacturing reached a new record level in 2020. Overall, foreign direct investment has jumped from $499.9 billion in 2005 to $1,886.8 billion in 2020, a new record. The manufacturing sector comprised 40.3% of total foreign direct investment in 2020, 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 in the midst of current disruptions. (Source: Bureau of Economic Analysis)
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 more than 30% of the nation’s energy consumption. Industrial users consumed 32.3 quadrillion Btu of energy in 2018, or 32.3% of the total. (Source: U.S. Energy Information Administration, Annual Energy Outlook 2019)
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.