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Applied Economics in US Manufacturing

      Assembly Plant
Photo Credit: The Chrysler 200 Factory Tour, an interactive online experience using Google Maps Business View technology, takes consumers inside the new 5-million-square-foot Sterling Heights Assembly Plant for a behind-the-scenes peek at how the 2015 Chrysler 200 is built.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 600-13 provides 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 10th among 49 total countries in Statistica’s Made-in-Country IndexU.S. ranks 8th in the Ipsos National Brands IndexFigure 5.11 from AMS 600-13: Ipsos National Brands Index, 2021
Figure 5.11 from AMS 600-13: Ipsos National Brands Index, 2021Credit:
          
  Figure 5.11 from AMS 600-13: Ipsos National Brands Index, 2021***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 totalInflation - Cumulative Percent Change in the Producer Price Index (Selling Price Received), 2005-2023
Figure 4.6 from AMS 600-13: Inflation - Cumulative Percent Change in the Producer Price Index (Selling Price Received), 2005-2023Credit:
          
  AMS 600-13***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 50th 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 50th percentile, but below the world average of 2.9 %.

 
      Figure 2.2 from AMS 600-13: National 5-Year Compound Annual Growth, by Country (2016 to 2021): Higher is Better
Figure 2.2 from AMS 600-13: National 5-Year Compound Annual Growth, by Country (2016 to 2021): Higher is BetterCredit:
          
  AMS 600-13***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 2nd largest 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.Figure 2.8 from AMS 600-13: Value Added by Major Sectors, Top 10 Largest Manufacturing Countries, 2020
Figure 2.8 from AMS 600-13: Value Added by Major Sectors, Top 10 Largest Manufacturing Countries, 2020Credit:
          
  AMS 600-13***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.Figure 4.10 from NIST AMS 100-13: Manufacturing Total Factor Productivity Index
Figure 4.10 from NIST AMS 100-13: Manufacturing Total Factor Productivity IndexCredit:
          
  AMS 100-13***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
	4th in 2020 patent applications
		5th in 2020 research and development expenditures as a percent of GDP
		17th in 2019 researchers per million people
		24th 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. 9th
		The World Economic Forum, which assesses the competitiveness in determining productivity, ranked the U.S. 2nd in 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. 5th.Figure 5.7 from AMS 600-13: IMD World Competitiveness Rankings for the US: Lower is Better (i.e., a Rank of 1 is Better than a Rank of 64) – 64 countries ranked
Figure 5.7 from AMS 600-13: IMD World Competitiveness Rankings for the US: Lower is Better (i.e., a Rank of 1 is Better than a Rank of 64) – 64 countries rankedCredit:
          
  AMS 600-13***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.

 
      Figure 2.10 from AMS 600-13: Value Added for Durable Goods by Type (billions of chained dollars), 2008-2022
Figure 2.10 from AMS 600-13: Value Added for Durable Goods by Type (billions of chained dollars), 2008-2022Credit:
          
  AMS 600-13

 
      Figure 2.11 from AMS 600-13: Value Added for Nondurable Goods by Type (billions of chained dollars), 2008-2022: Higher is Better
Figure 2.11 from AMS 600-11: Value Added for Nondurable Goods by Type (billions of chained dollars), 2008-2022: Higher is BetterCredit:
          
  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 %Figure 4.5 from AMS 600-13: Employee Compensation (Hourly)
Figure 4.5 from AMS 600-13: Employee Compensation (Hourly)Credit:
          
  AMS 600-13

 
      Figure 4.2 from AMS 600-13: Manufacturing Fatalities and Injuries
Figure 4.2 from AMS 600-13: Manufacturing Fatalities and InjuriesCredit:
          
  AMS 600-13***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.Figure 3.1 from AMS 600-13: Manufacturing Supply Chain, 2021
Figure 3.1 from AMS 600-13: Manufacturing Supply Chain, 2021Credit:
          
  AMS 600-13For more information, please see NIST AMS 100-49 and the Manufacturing Cost Guide.

AMS 600-13Credit:
          
  AMS 600-13

MCG for Supply Chain StatisticsCredit:
          
  MCG
  Buildings and Construction, Building economics, Manufacturing, Machining, Manufacturing economics, Supply chain and Sustainable manufacturing

    
    Contacts
      
        

Douglas Thomas
    
      
  douglas.thomas@nist.gov
  (301) 975-4918

Created January 24, 2020, Updated December 5, 2023
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