PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Drop in Manufacturing Production Shows Continuing Uneven Economy

By at 16 June, 2017, 9:43 am

by Raymond J. Keating-

Unevenness and under-performance persists in the U.S. economy as entrepreneurs, businesses and investors await strong pro-growth policies from Washington, D.C., in terms of tax and regulatory relief and reform.

May’s Report and Recent Months

Industrial production in May, according to the Federal Reserve, showed no growth. (Industrial production measures the real output of manufacturing, mining, and electric and gas utilities.

Zero percent growth in May followed on strong 1.1 percent growth in April, but unevenness during the first quarter (0.1 percent in March, -0.3 percent in February, and 0.3 in January).

Last month, manufacturing was the problem spot. After advancing by 1.1 percent in April, manufacturing output fell by 0.4 percent. In addition, manufacturing declined in March by 0.8 percent.

Good news continued in mining, however, rising by 1.6 percent in May. Earlier in 2017, mining showed strong growth in three of four months.

The Long View

Over the long haul, industrial production had recovered and moved slightly above the pre-recession high in the second half of 2014. It subsequently went into a two-year decline. As of May of this year, industrial production remained below the pre-recession high.

As for manufacturing output, it has not come close to the pre-recession high. From August of last year to April 2017, though, there was clear growth, which, again, stopped in May.

Hopefully, these recent ills in industrial and manufacturing production will be a brief falloff, and growth will resume. Keep in mind, that when talking about manufacturing, for example, we’re very much focused on small business, with 75 percent of manufacturers having less than 20 workers and 94 percent have less than 100 workers. Of course, the best way to help the entire industrial sector from a policy perspective is to advance pro-growth tax and regulatory relief, and focus on lowering barriers to trade.

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Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

Keating’s latest book published by SBE Council is titled Unleashing Small Business Through IP:  The Role of Intellectual Property in Driving Entrepreneurship, Innovation and Investment and it is available free on SBE Council’s website here.

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