Manufacturing value-added output increased from $2.571 trillion in the third quarter of 2021 to an all-time high of $2.714 trillion in the fourth quarter of 2021. Value-added output rose to new record levels in the fourth quarter for both durable goods (up from $1.381 trillion to $1.440 trillion) and nondurable goods (up from $1.190 trillion to $1.274 trillion). Overall, manufacturing accounted for 11.3% of real GDP in the fourth quarter, the highest percentage in three years. Real value-added output in the manufacturing sector increased from $2.320 trillion at the annual rate in the third quarter to a record $2.381 trillion in the fourth quarter, as expressed in chained 2012 dollars. In the fourth quarter, real value-added output also hit a new height for durable goods, rising from $1.277 trillion to $1.308 trillion, with real value-added output for nondurable goods (up from $1.042 trillion to $1.072 trillion) increasing to its best reading since the second quarter of 2008. (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 $2.68 to the overall U.S. economy. This figure represents one of the largest sectoral multipliers in the economy. In the private sector, only mining ($2.84) and transportation and warehousing ($2.73) have a higher multiplier. In addition, for every one worker in manufacturing, five 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, nearly $4.00 in labor income earned are added to the overall U.S. economy. (Source: NAM calculations using 2020 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 rose by 18,000 in May. Despite some softening, as well as significant ongoing challenges with supply chain disruptions, workforce shortages and soaring costs, hiring in the sector has remained robust. Through the first five months of 2022, the sector hired 213,000 employees, building on the 365,000 workers added in calendar year 2021, the most since 1994. Currently, the manufacturing sector has 12,768,000 employees, with 17,000 fewer workers today relative to February 2020. Manufacturing employment is on track to return to pre-pandemic levels in the next month or two.
Meanwhile, nonfarm payroll employment increased by 390,000 in May, averaging a solid 408,000 over the past three months. The unemployment rate remained at a post-pandemic low of 3.6%, and the labor force participation rate ticked up from 62.2% to 62.3%. Of note, the participation rate remained below pre-pandemic levels, with 63.4% in February 2020. (Source: Bureau of Labor Statistics)
In 2020, manufacturing workers in the United States earned $92,832 on average, including pay and benefits. Workers in all private nonfarm industries earned $77,181 on average. Looking specifically at wages, average hourly earnings of production and nonsupervisory workers in manufacturing rose 0.4% from $24.83 in April to $24.94 in May, up 5.5% from $23.64 one year ago. The year-over-year pace of wage growth edged down from 5.7% in March and April, which had been the fastest pace since August 1982. For all manufacturing employees, average hourly earnings were $30.78 in May, up 4.2% from $29.53 from 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, 95% of manufacturing employees were eligible for health insurance benefits in 2020, according to the Kaiser Family Foundation. This is significantly higher than the 81% average for all firms. Of those who are eligible, 77% participate in their employer’s plans (i.e., the take-up rate). State and local government (90%), transportation, communications and utilities (87%), finance (82%) and wholesale (81%) had higher take-up rates in 2021. Meanwhile, the average annual cost of a family health care plan for a family of four in manufacturing was $21,280 in 2021. (Source: Kaiser Family Foundation)
Manufacturing reported 996,000 job openings in April, a record level. Over the past 12 months, job openings in the sector have averaged nearly 877,250. The number of job postings continued to be well above pre-pandemic levels, as companies ramped up activity and looked for more workers to meet the additional capacity. In addition, total quits in the manufacturing sector eased from a record 362,000 in March to 354,000 in April. That figure translated into 2.8% of the manufacturing workforce and continued a trend of very significant churn in the labor market, exacerbating the workforce difficulties that companies are experiencing. Similarly, the April survey reported 4,424,000 quits in the nonfarm business economy, down from 4,449,000 in March and still not far from November’s record pace (4,510,000).
In the larger economy, nonfarm business job openings remained highly elevated, although they pulled back from a record 11,855,000 in March to 11,400,000 in April. The April report also documented 5,941,000 unemployed Americans, which translated into 52.1 unemployed workers for every 100 job openings in the U.S. economy. That number marked an increase from the record set in March of 50.2 unemployed workers for every 100 job openings. Overall, the data speak to the extreme tightness of the labor market, with significantly more job openings than people 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 nearing an all-time high in 2018, the global economy has weakened on trade policy and COVID-19 challenges. Yet, the longer-term trend line has been encouraging, especially if—as expected—trade volumes rebound in 2021 and beyond. In 1990, for example, U.S. manufacturers exported $329.5 billion in goods. By 2000, that number had more than doubled to $708.0 billion. In 2018, it was just shy of the all-time high reached in 2014, which was $1.403 trillion. U.S.-manufactured goods exports have declined from $1,399.7 trillion in 2018 to $1,365.3 trillion in 2019 to $1,171.4 trillion in 2020. Even at that lower level, however, total U.S.-manufactured goods exports in 2020 were 3.55 times the levels seen three decades ago. (Source: U.S. Commerce Department)
Manufactured goods exports have grown substantially to our largest trading partners since 1990, including to Canada, Mexico and even China. The North American market remains vital for manufacturers in the United States. Indeed, Canada and Mexico purchase more manufactured goods from the U.S. ($483.8 billion in 2019) than from our next 10 largest trading partners combined ($460.3 billion in 2019). Meanwhile, U.S.-manufactured goods exports to China have nearly tripled from $31.9 billion in 2005 to $87.5 billion in 2019. (Source: U.S. Commerce Department)
World trade in manufactured goods has multiplied 2.67 times between 2000 and 2019—from $4.8 trillion to $12.75 trillion. The U.S. share of world trade in manufactured goods was 8.1% in 2019. (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 $2.27 trillion in value added from manufacturing in 2019, only seven other nations (including the U.S.) would rank higher in terms of their GDP. Those other nations with higher GDP in 2019 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, Brazil, Canada, Russia and South Korea, 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 nearly 2.5 million manufacturing workers in the United States in 2016, or roughly one-fifth of total employment in the sector. In 2016, the most recent year with data, manufacturing sectors with the largest employment from foreign multinationals included motor vehicles and parts (407,300), chemicals (364,400), food (301,000), machinery (228,100), primary and fabricated metal products (168,000), plastics and rubber products (156,900) and computer and electronic products (152,900). Total compensation in the manufacturing sectors from these affiliates was $228.2 billion, and those entities spent $43.0 billion in research and development. (Source: Bureau of Economic Analysis)
Manufacturers in the United States perform 57.9% 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 $295.7 billion in 2020. In the most recent data, pharmaceuticals accounted for 35.7% of all manufacturing R&D, spending $105.7 billion in 2020. Computer and electronic products (16.0% of manufacturing R&D), semiconductor and other electronic components (13.3%) and motor vehicles and parts (8.0%) also contributed significantly to R&D spending in 2020. (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.