28  Monthly Labor Review • April 2011

The 2007–09 Recession: Manufacturing

Manufacturing employment hard hit 

during the 2007–09 recession

Megan M. Barker

Megan M. Barker is an 

economist in the Division 

of Current Employment

Statistics, Office of 

Employment and

Unemployment Statistics,

Bureau of Labor Statistics. 

Email: barker.megan@

bls.gov.

During the 2007-09 recession, employment in manufacturing 

declined sharply. When combined with other manufacturing 

indicators, the job loss shows that manufacturing was particularly 

hard-hit during the downturn

Manufacturing employment has 

been on a downward trend since 

its all-time peak in 19791 with 

job losses accelerating during economic recessions.2

 (See chart 1.) In the years following the 2001 recession, employment fell at a 

faster pace than during other post-recession 

periods with both durable and nondurable 

goods experiencing widespread job losses. 

Manufacturing job losses then accelerated 

during the December 2007–June 2009 recession and totaled more than 2 million 

employees, or 15 percent of its workforce, 

during the 18-month period.

The manufacturing workweek typically 

serves as a leading indicator for identifying 

changes in business cycles.3 Employers often 

adjust hours before adjusting their workforce 

to meet changes in demand. Average weekly 

hours of production employees in manufacturing reached a high in March 2008, 3 months 

after the start of the recession; the manufacturing workweek had been about unchanged for 

nearly a year leading up to its peak. (See chart 

2.) The workweek then decreased until March 

2009, 3 months before the recession’s conclusion. During this time, the factory workweek 

became 2 hours shorter. Contributing to 

this trend, overtime hours of production and 

nonsupervisory employees had begun to fall 

in February 2006, well before the recession 

began, and continued to decline until March 

2009. Weekly manufacturing overtime fell by 

2 hours during that period.

Manufacturing employment 

changes: the bigger picture

As might be expected, the 2007–09 recession 

had a negative impact on both manufacturing employment and total nonfarm employment. (See chart 3.) In the year leading up 

to the recession, however, manufacturers had 

experienced moderate job losses, while total 

nonfarm employment grew slowly. A month 

after the start of the recession, total employment began to fall and the rate of manufacturing job losses began to accelerate. In the 

latter half of 2008 and into early 2009, manufacturing saw historically large monthly job 

losses. Even after the 18-month-long recession ended, manufacturing continued to lose 

jobs, although at a slower rate.

Manufacturing job losses were widespread throughout the component industries 

during the 2007–09 recession. (See table 1.) 

The 1-month diffusion index for manufacturing employment remained well below 50 

for nearly the duration of the recession. This 

index measures the dispersion of employment change; a value below 50 indicates that 

more manufacturing industries are reducing 

jobs than adding them over the month. The 

index measured just 6.8 in January 2009, the 

month with the largest manufacturing job 

loss in more than 30 years.
Monthly Labor Review • April 2011  29

1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009

 Chart 1. Manufacturing employment, monthly data, seasonally adjusted, January 1975–December 2010

Thousands

20,000

19,000

18,000

17,000

16,000

15,000

14,000

13,000

12,000

11,000

10,000

Thousands

20,000

19,000

18,000

17,000

16,000

15,000

14,000

13,000

12,000

11,000

10,000

NOTE:  Shaded areas denote recessions as determined by the National Bureau of Economic Research (NBER).

1975

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

 Chart 2. Average weekly hours of manufacturing production and nonsupervisory employees, monthly 

data, seasonally adjusted, January 1990–December 2010

Hours

43

42

41

40

39

38

Hours

NOTE:  Shaded areas represent recessions as determined by the National Bureau of Economic Research (NBER).

1990

43

42

41

40

39

38
The 2007–09 Recession: Manufacturing

30  Monthly Labor Review • April 2011

Durable goods manufacturing. During the recession, the 

bulk of manufacturing employment declines occurred in 

durable goods industries, accounting for 75 percent of factory job losses; by contrast, durable goods jobs accounted 

for 63 percent of total manufacturing employment at the 

start of the recession. The average durable goods industry 

lost 11 percent of its workforce between December 2007 

and June 2009. Job losses were concentrated in five main 

industries: transportation equipment, fabricated metal 

products, machinery, wood products, and furniture and 

related products.

The transportation equipment industry lost the greatest number of jobs in manufacturing and accounted for a 

disproportionate share of the jobs lost in durable goods. 

Transportation equipment accounted for 12 percent of 

total durable goods employment but 23 percent of the 

decline in durable goods employment. Job losses in the 

transportation equipment industry resulted primarily 

from a 35 percent decline in motor vehicles and parts 

manufacturing employment during the 2007–09 recession. Employment losses in the industry were reflective 

of the reduced demand for motor vehicles. During the 

months of the recession, total vehicle sales fell 38 percent.4

 Sluggish sales negatively impacted the jobs of both 

motor vehicle and parts dealers and motor vehicle and 

parts manufacturers. 

Fabricated metal products was the second largest contributor to job loss in manufacturing. Over the course of 

the recession, 13 percent of manufacturing jobs lost were 

in fabricated metal products.

Wood products and furniture and related products together accounted for 14 percent of the total job losses in 

manufacturing. These industries provide inputs used in 

construction, an industry that experienced similarly sharp 

declines in employment. The job losses in construction 

were related to the collapse of the housing market. The 

collapse affected not only construction employment, but 

also jobs in related manufacturing component industries.

Machinery manufacturing supports the efforts of other 

industries—including construction and mining—and was 

affected by their recession-related declines. The machinery 

industry accounted for more than 8 percent of manufacturing job losses during the recession. Trends in machinery 

manufacturing employment were like those in construcTotal nonfarm

Manufacturing

 Chart 3. Total nonfarm and manufacturing indexes of employment, seasonally adjusted, January 2007–

June 2010

4

2

0

–2

–4

–6

–8

10

12

14

16

18

–11 –9 –7 –5 –3 –1 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29

4

2

0

–2

–4

–6

–8

10

12

14

16

18

Index

(Dec. 2007=0)

Number of months from start of recession

Index

(Dec. 2007=0)
Monthly Labor Review • April 2011  31

tion, where the collapse of the housing market led to a loss 

of 20 percent of construction jobs during the recession. 

Construction machinery manufacturing lost 18 percent of 

its workforce during the same period.

Nondurable goods manufacturing. Nondurable goods lost 

nearly half a million jobs during the 2007–09 recession, 

accounting for about a quarter of the total decline in 

manufacturing employment. Job losses occurred throughout nearly all of the component industries. A substantial 

proportion of manufacturing job losses—6 percent—were 

in plastics and rubber products.

During the recession, petroleum and coal products was 

the only industry that did not show a decline in employment. Instead, employment remained little changed at the 

end of the recession.

Employment change in manufacturing, by industry, seasonally 

adjusted, December 2007 to June 2009

Industry

Number 

(in thousands)

Percent

change

Distribution 

of decline in 

manufacturing 

(percent)

Manufacturing................................................................ –2,026 –15 100

Durable goods.............................................................. –1,538 –18 76

Wood products......................................................... –146

Nonmetallic mineral products............................ –102

 Primary metals......................................................... –99 –22 5

      Fabricated metal products................................... –259 –17 13

     Machinery.................................................................. –168 –14 8

Computer and electronic products.................. –128

Electrical equipment and appliances............... –58

     Transportation equipment .................................. –387 –23 

          Motor vehicle and parts.................................... –340 –35 17

Furniture and related products.......................... –139

 Miscellaneous manufacturing............................ –52 –8 3

Nondurable goods...................................................... –488 –10 

Food manufacturing.............................................. –2

Beverages and tobacco products...................... –1

Textile mills................................................................ –41

Textile product mills............................................... –31

Apparel........................................................................ –46

Leather and allied products................................ –5

Paper and paper products................................... –47

Printing and related support activities............ –96

Petroleum and coal products.............................

 Chemicals................................................................... –53 –6 3

Plastics and rubber products.............................. –131

Table 1. Manufacturing indicators 

reflect industry weakness

Weakness in the manufacturing labor 

market also was reflected in other 

manufacturing indicators. (See table 

2.) Declines in durable goods new 

orders, unfilled orders, motor vehicle 

production, and motor vehicle sales 

suggested the same weakness depicted by the employment numbers.

When the recession began, the 

manufacturing inventories-to-shipments ratio began to increase sharply as manufacturers experienced a 

noticeable slowdown in new orders 

and shipments.5 This resulted in a 

buildup in inventories, which continued throughout the first 9 months of 

the recession. The sharp declines in 

shipments reduced the need for labor to produce manufactured goods. 

The manufacturing inventory-toshipments ratio began to decline 4 

months before the recession ended. 

The decline in the ratio was due to a 

pickup in shipments while inventories were shrinking. During these 4 

months, manufacturing employment 

continued to decline as manufacturers adapted to greater demand by 

increasing hours before hiring.

Employment decline reminiscent of previous 

recession

While manufacturing employment has been trending 

down since 1979, job losses accelerated during recession 

years. The most recent recession started in December 

2007 and lasted for 18 months. By contrast, the previous 

2 recessions each lasted 8 months.

During the 1990–91 recession, manufacturing jobs were 

lost more rapidly than in pre-recession years. Once the 

recession ended in March 1991, manufacturers continued 

to reduce employment, but at a slower rate. (See chart 4.) 

About 2 years later, manufacturers began to hire; however, 

the industry never recovered all the jobs it had lost in the 

early 1990s. After adding nearly 900,000 jobs between 

July 1993 and March 1998, manufacturers began to slowly 
The 2007–09 Recession: Manufacturing

32  Monthly Labor Review • April 2011

Quarterly change in manufacturing indicators, seasonally adjusted, first quarter 2007–second quarter 2009

Indicator

2007 2008 2009

Quarter IV Quarter I Quarter II Quarter III Quarter IV Quarter I Quarter II

Manufacturing employment

Total manufacturing, in thousands........................... –49 –84 –145 –241 –427 –630 –485

Durable goods............................................................ –50 –58 –97 –179 –310 –47

Motor vehicle and parts..................................... –31 –34 –21 –63 

Motor vehicle production and sales

Motor vehicle production, in thousands................ 25 –40 15 –35 –13 –55 –17

Motor vehicle sales, in millions...................................

Durable goods orders, inventories and 

shipments

–.5 –.8 –1.1 –1.2 –2.5 –.4 .1

New orders, durable goods, in millions of dollars. 14,592 –18,483 –2,174 –15,041 –35,130 –16,428 3,843

Unfilled orders, durable goods, in millions of

dollars .............................................................................. 64,199 31,292 19,618 3,350 –29,677 –47,637 –24,

Inventory–to–shipments ratio, durable goods..... .02 .03 .00 .06 .14 .06 –.03

Table 2.

SOURCE:  Manufacturing employment data are from the Current

Employment Statistics (CES) program of the Bureau of Labor Statistics.

Motor vehicle production and sales data are from the Bureau of

Transportation Statistics, U.S. Department of Transportation, and are

seasonally adjusted by the Bureau of Economic Analysis. Durable goods

orders, unfilled orders, and inventory-to-shipment ratio are from the

Manufacturers’ Shipments, Inventories, and Orders Survey of the U.S.

Census Bureau.

 Chart 4. Manufacturing index of employment for three most recent recessions, seasonally adjusted

–5 –4 –3 –2 –1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

1990–91 recession (8 months)

4

2

0

–2

–4

–6

–8

10

12

14

16

18

4

2

0

–2

–4

–6

–8

10

12

14

16

18

Index

(start of recession = 0)

Index

(start of recession = 0)

2001 recession (8 months) 2007–09 recession (18 months)

Number of months from start of recession
Monthly Labor Review • April 2011  33

cut jobs again as an economic crisis in Asia started to impact U.S. exports.6

 By the start of the 2001 recession 3 

years later, manufacturing employment already had fallen 

by 700,000. (See chart 1.)

Manufacturing employment leveled off in early 2000 

and started to decline leading up to the 2001 recession. 

Job losses were larger and more rapid than those of the 

1990–91 recession. Manufacturing continued to lose jobs 

at a relatively high rate for nearly 2 years after the recession ended in November 2001. During those 3 years, 

manufacturing cut 3 million jobs, accounting for 16 percent of its workforce. In the years from 2005 until the 

2007–09 recession, the industry cut payrolls at a slower 

rate and never recovered the lost jobs.

Manufacturing employment trends of the 2007–09 

recession were similar to the 2001 recession. During 

both recessions, a large decline in industry employment 

occurred. From December 2007 until December 2009—

when manufacturing employment reached a new low—

the manufacturing industry lost 2 million jobs, or 17 percent of its workforce, and industry employment fell to its 

lowest level since March 1941.

Notes

1 The data on employment used in this article are from the Current 

Employment Statistics (CES) program, which is a monthly survey of 

approximately 140,000 nonfarm businesses and government agencies 

representing approximately 440,000 individual worksites. For more 

information on the program’s concepts and methodology, see “Technical Notes to Establishment Survey Data” at www.bls.gov/web/cestn2.

htm. CES data are available at www.bls.gov/ces. The CES data used in 

this article are seasonally adjusted.

2 Recessions are identified by the National Bureau of Economic 

Research (NBER). According to the NBER, the most recent recession 

began December 2007 and ended June 2009. The previous two recessions were from March 2001 to November 2001 and from July 1990 to 

March 1991. For a complete list of business cycle dates, please consult 

the NBER webpage at www.nber.org/cycles/cyclesmain.html (visited 

Nov. 2, 2010).

3 The Conference Board, “Global Business Cycle Indicators,” www.

conference-board.org/data/bcicountry.cfm?cid=1 (visited Apr. 6, 

2011).

4 Bureau of Economic Analysis, National Economic Accounts, 

Supplemental Estimates: Motor Vehicles, www.bea.gov/national/xls/

gap_hist.xls (visited Feb. 7, 2011).

5 U.S. Census Bureau, www.census.gov (visited Apr. 4, 2011). 

6 Julie Hatch and Angela Clinton, “Job growth in the 1990s: a retrospect,” Monthly Labor Review, December 2000, pp. 3–18, www.bls.

gov/opub/mlr/2000/12/art1full.pdf (visited Apr. 6, 2011).