Useful Stats: Is US manufacturing productivity on a decline? A detailed look at BLS OPT data.

Despite a $4.1 trillion increase in annual output since 1987, manufacturing industries in the United States have been declining in both their labor productivity and share of output. The Bureau of Labor Statistics’ labor productivity (output per hour) index, tied to 2012 values, for manufacturing industries has dropped by nearly five points since its all-time high of over 101 in Q2 2013.

This edition of Useful Stats explores the Bureau of Labor Statistics’ (BLS) Office of Productivity and Technology (OPT) data on industry productivity, focusing on manufacturing industries. First, the total industry output in millions of USD is examined, then a labor productivity (output per hour) index breakdown of manufacturing industries.

Manufacturing output falls behind wholesale and retail trade.

Recent SSTI coverage of the manufacturing sector using World Bank data found that while value added was increasing steadily over time, its proportion added to GDP has been on a downward trend. The following data explores a major component of value added: output.

Although the monetary value of manufacturing output has significantly increased over the past 35 years, its share of GDP has decreased, indicating that manufacturing has grown more slowly than other sectors.

Figure 1, below, charts the sectoral output of 3-digit NAICS code industries in millions of USD from 1987-2022. From the start of the data in 1987 through 2003, manufacturing industries had the most considerable current dollar output of any sector, led by transportation equipment, food manufacturing, and chemicals.

In 2004, wholesale trade surpassed the manufacturing industries in sectoral output, followed by retail trade in 2016, leaving the manufacturing sector with the third largest share of total output captured by BLS OPT data.

A lower share of the total sectoral output means that the manufacturing industries produce a smaller proportion of the overall economy's output.

However, this does not mean that the output is decreasing. The U.S. manufacturing industries captured by BLS OPT (NAICS 311-316, 321-327, 331-337, and 339) have nearly tripled in output from 1987 to 2022, from $2.1 to $6.2 trillion, increasing an average three percent per year.

While an average annual increase of three percent is impressive, it lags behind the four and five percent averages wholesale and retail trades have maintained over the past 35 years. In 2022, the sectoral totals captured by BLS OPT were $7.1 trillion in retail trade and $7.6 trillion in wholesale trade (compared to $1.4 and $1.8 trillion in 1987). These sectors, alongside manufacturing, represented 83% of overall output in 2022.

Figure 1: Industry breakdown of sectoral output in millions of current USD

Trends in labor productivity

While output is a meaningful metric, it does not account for the efficiency of work done. BLS OPT calculates a labor productivity index showing the output per hour of industries. Values are indexed to 2012 = 100, where any number above 100 represents a labor productivity higher than that of 2012’s and any below 100 lower than 2012’s.

Figure 2, below, shows up to five industries’ index values at a time, searchable and selectable via the “enter series” window below the title.

Figure 2: Labor productivity index of 3 NAICS code industries

On average, industries have grown from a base value of 100 in 2012 to approximately 117 in 2022. Yet this increase has not been felt evenly across industries; oil and gas extraction has grown to 287 in 2022, followed by nonstore retailers at 245 and electronics and appliance stores at 193. On the other hand, industries like beverages and tobacco products, warehousing and storage, and couriers and messengers have fallen to 57, 57, and 61, respectively—nearly half of their 2012 values.

Manufacturing industries specifically have an average indexed value of 95 in 2022, with just 5 of the 21 captured industries above 100. In other words, all but five manufacturing industries captured by the data have fallen below their 2012 values. These five include apparel, leather and allied products, nonmetallic mineral products, petroleum and coal products, and printing and related support activities.

The data tool, figure 2, can explore and compare industries of interest.

This article uses BLS OPT data from the “Detailed industries – June 29, 2023” data sheet, available for download here.