Trends in Manufacturing Revenue & Profitability

The chart above shows total sales per quarter across the entire US for each quarter from 1992 through Q1, 2007. This data is taken from the US Census Bureau's Quarterly Financial Report.

The chart clearly shows not only the drop off in manufacturing sales during 2001 and 2002, but also the dramatic reduction in income after tax during this period. From 2004 onwards there has been a return to profitability across the manufacturing sector, and more recently a steady trend to profitability levels even higher than the late 1990s.

Given the reduction in total manufacturing employment covered in a previous post, one can assume that keeping payroll costs in check while output is rising is having a major contributor to the increased margins that US manufacturing companies are achieving.

Manufacturing Employment Statistics

Source: US BLS - all data is seasonally adjusted.

The charts above are from the US Bureau of Labor Statistics' Current Employment Statistics Survey. They show total manufacturing employment and the number of production workers growing during the late 1990s. There is then a very pronounced reduction in manufacturing employment between 2000 and 2004 followed by a more gradual reduction in total employment and a slight increase in the number of production workers.

The average hourly earning across the entire manufacturing sector has shown a steady increase over the period from 1992 to 2007, but of course with the more recent reductions in total manufacturing employment that means that manufacturers have been able to hold payroll cost steady even while output has been rising.

Manufacturing Sectors

Click on any of the charts to expand.

The charts above show the trends over the last 15 years in several of the major subsectors of durable and nondurable goods manufacturing.

Manufacturers' Shipments, Inventories, & Orders

Click on either chart to enlarge

The U.S. Census Bureau has great data on
Manufacturers' Shipments, Inventories, & Orders.

The charts above are compiled using data on shipments in different manufacturing sectors over the period of Jan 1992 through June 2007. The plots show half year shipment data in $ millions.

In the first half of 2007 US manufactured goods shipments came to $1.28 trillion in durable goods and $1.19 trillion in nondurable goods. As you can see there was a significant drop off in output of durable goods in 2001 and 2002. Since then growth has returned to the record annual output of $4.94 trillion in 2006.

Introduction

The purpose of this blog is to provide a little balance to the widespread notion that North American manufacturing in general and US manufacturing in particular is rapidly 'going down the tubes'.

After having examined mutliple sources of quantitative information about US and global manufacturing it is my belief that the health of manufacturing in North America is much better than widely believed.

Over the next few weeks and months it is my hope to share with you some of the results of my investigations into such questions as "What manufacturing sectors are doing well, and which are struggling?", and "Is the USA really turning into a service economy?"