U.S. Manufacturing Economy (2024)

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Applied Economics in US Manufacturing

SUMMARY: In terms of value added, the primary measure of economic activity, the U.S. is the second largest manufacturing nation in the world behind that of China. The U.S. ranking as a brand suggests that it tends to be a differentiator rather than a cost competitor; however, a number of nations rank higher as a brand. In terms of value added, the largest subsectors of manufacturing are computer/electronic products followed by chemical products and food, beverage, and tobacco products.

There are three primary aspects of examining U.S. manufacturing statistics on competitiveness: (1) how the U.S. industry compares to other countries, (2) the trends in the domestic industry, and (3) the industry trends compared to those in other countries. NIST AMS 600-13provides statistics on these aspects. Below are highlights from this publication. Due to the necessity to use a selection of datasets, there may be minor discrepancies between various statistics. Additional data and statistics can be estimated using NIST’s Manufacturing Cost Guide.

Manufacturing in Brief

Some brief figures on U.S. manufacturing include the following:

• In 2022, Manufacturing contributed $2.3 trillion to U.S. GDP amounting to 11.4% of total U.S. GDP, measured in chained 2012 dollars
  • Including direct and indirect (i.e., purchases from other industries) value added, manufacturing contributed an estimated 24% of GDP.
• According to the Current Population Survey, there were 15.2 million employees in U.S. manufacturing in 2022, representing 9.6 % of total U.S. employment
• Manufacturing accounted for 76.6% of total U.S. environmental impact according to NIST’s Manufacturing Cost Guide
• Average compensation in U.S. manufacturing is 6.3 % higher than that for total private industry

U.S. as a Brand

Frequently, countries are discussed as brands. Two rankings provide insight into the U.S. as a brand:

• U.S. ranks 10^th among 49 total countries in Statistica’s Made-in-Country Index

• U.S. ranks 8^th in the Ipsos National Brands Index

Inflation

Inflation has increased in recent years, which diminishes purchasing power.

• The prices received by producers for all manufacturing for the past two years between July 2020 and July 2022 has increased 33.4%
  • For context, in the fifteen years prior to that (i.e., June 2005 to June 2020) it increased 27.1% in total

Manufacturing Growth

• U.S. compound real (i.e., controlling for inflation) annual growth between 1996 and 2021 (i.e., 25-year growth) was 2.1%, which places the U.S. below the 50^th percentile.
• The compound annual growth for the U.S. between 2016 and 2021 (i.e., 5-year growth) was 2.2%. This puts the U.S. just above the 50^th percentile, but below the world average of 2.9 %.

Manufacturing Industry Size

• Manufacturing accounts for 17.5 % of global GDP
  • Since 1970, global manufacturing ranged between 13.7% and 17.5% of global GDP
• U.S. manufacturing value added, as measured in constant 2015 dollars, is 16.3 % of global manufacturing value added putting it second to that of China, which is 30.9 %.
• Among the ten largest manufacturing countries, the U.S. is the 2ndlargest manufacturing value added per capita while China ranked 8th. Out of all countries the most recent U.S. rank is 14th
• Out of six manufacturing industries, the U.S. ranked 2nd in all but textiles/clothing where it ranked 4th. China was the largest for all industries.

Productivity

• The five-year annual compound growth in labor productivity is -0.6 %.
• The five-year annual compound growth in multifactor productivity is 0.7 %.
• The U.S. is ranked ninth in output per hour among 142 countries using data from the Conference Board.
• In 2021, Manufacturing total factor productivity was 3.4 % above its 2005 level.
  • In 2021, durable goods was 8.7 % above its 2005 level.
  • In 2021, nondurable goods was 1.2 % below its 2005 level.

Economic Environment

There is no agreed upon measure for examining the environment for research, innovation, and other factors for doing business, but there are a number of common measures, which are discussed below.

• The ranking of the U.S. in these measures is a mixed bag, ranking high in some and lower in others.
• The U.S. ranks
  • 4^th in 2020 patent applications
  • 5^th in 2020 research and development expenditures as a percent of GDP
  • 17^th in 2019 researchers per million people
  • 24^th in 2020 journal article publications per capita.
• Competitiveness indexes
  • The 2023 IMD World Competitiveness Index, which measures competitiveness for conducting business, ranked the U.S. 9^th
  • The World Economic Forum, which assesses the competitiveness in determining productivity, ranked the U.S. 2^ndin 2019.
  • The Competitive Industrial Performance Index, which measures capacity to produce and export manufactured goods; technological deepening and upgrading; and world impact, ranked the U.S. 5^th.

Types of Goods Produced

The largest manufacturing subsector in the U.S. is computer and electronic products followed by chemical manufacturing and food, beverage, and tobacco products, as seen in Figure 2.9 and Figure 2.10 from AMS 600-13.

Manufacturing Safety, Compensation, and Profit

• Compensation
  • As seen in Figure 4.5, employee compensation, which includes benefits, has had a five-year compound annual growth of -0.1 %.
• Profit
  • Nonfarm proprietors’ income for manufacturing has had a five-year compound annual growth rate of -8.4%.
  • Corporate profits have had a five-year compound annual growth of 10.4 %.
• Safety
  • Fatalities have a five-year compound growth rate of -3.8 %.
  • Injuries have a five-year compound growth rate of -3.1%.
  • The injury rate has a five-year compound growth rate of -1.7 %

Manufacturing Assets and Supply Chain

• In 2021, U.S. manufacturing imported 20.4 % of its intermediate goods/services, resulting in 12.4 % of the output being of foreign origin.
  • The largest supply chain entity for U.S. manufacturing by country is itself (83.0 %) followed by Canada (3.1 %), China (1.8 %), and Mexico (1.5 %).
• In 2017, the U.S. manufacturing industry had $661.8 billion in assets in the form of buildings and structures with another $2645.6 billion in machinery and equipment.

For more information, please see NIST AMS 100-49and the Manufacturing Cost Guide.

Buildings and Construction, Building economics, Manufacturing, Machining, Manufacturing economics, Supply chain and Sustainable manufacturing