Economic News: Manufacturing Output Takes a Small Turn Up in May

By at 15 June, 2019, 8:39 am

by Raymond J. Keating-

Industrial production (i.e., the real output of the manufacturing, mining, and electric and gas utilities) took a welcome turn up in May, as did manufacturing output, which is the biggest chunk of industrial production.

According to the Federal Reserve’s latest report, industrial production grew by 0.4 percent. That growth came after a poor five month stretch that saw three months of decline, and two months of effectively no growth.

Manufacturing production grew by 0.2 percent in May. That small amount of growth came after significant declines in January (-0.6 percent), February (-0.6 percent), and April (-0.5 percent), and no growth in March. Compared to a year earlier, manufacturing production in May was up by only 0.7 percent compared to May 2018. (See following chart.)

Source: Federal Reserve Bank of St. Louis, FRED

And during the first quarter, by the way, both industrial and manufacturing production registered -2.2 percent annualized growth.

U.S. manufacturers have been hurt by anti-growth trade policies that have raised costs and uncertainties. Clearly, a shift in trade policy back to an agenda focused on reducing governmental barriers would be a big plus for manufacturing, as well as for overall U.S. economic growth.

Finally, it must be kept in mind that U.S. manufacturing is all about small to mid-size businesses.

For example, 74.7 percent of manufacturing employer firms have fewer than 20 workers, 93.5 percent fewer than 100 workers, and 98.5 percent fewer than 500 workers. If trade policy moves in a direction that opens more opportunities and lowers costs and uncertainties it would be good news for manufacturers, especially small manufacturers.


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


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