Notes on the manufacturing productivity slowdown
1. A common narrative: "US manufacturing output has held steady even as employment has fallen -- productivity growth in the industry has remained high"
bloomberg.com/view/articles/…
Alas... manufacturing output has been ~flat since 2008 and employment is actually up a bit
fred.stlouisfed.org/series/IPMAN
fred.stlouisfed.org/series/MANEMP
From Lashkari and Pearce: both labor productivity and multifactor productivity in manufacturing have been flat-to-declining since ~2010
And this is not due to composition effects (initial vs. current weights)
libertystreeteconomics.newyorkfed.org/2024/07/the-my…
This is true both at the tippy top -- the four fastest-growing ("leader") industries and the rest
Another way to see that this is broad-based is cutting by subsector, via Joey Politano:
apricitas.io/p/americas-man…
2. You can see in that chart the Susan Houseman et al fact: since 1997, ~half of the growth in manufacturing output is just from computers and electronic manufacturing
econtalk.org/susan-houseman…
And that computer manufacturing output growth is:
(1) about improved *quality*, rather than quantity 'per se'
(2) in part reflects mismeasured inputs via offshoring to cheap labor
minneapolisfed.org/article/2012/i…
3. Actually, nondurable manufacturing productivity has been flat as far back as the data go -- to 1987
The pre-2008 manufacturing productivity growth was driven by *non-durable* productivity growth -- but within that, a lot of heterogeneity
Justin Fox: bloomberg.com/view/articles/…
4. It turns out that the US, along with Japan, has had uniquely weak manufacturing productivity growth (via Greg Ip)
wsj.com/economy/americ…
I wonder how much of that is compositional?
Countries with faster growth maybe just have lots of the *industries* with faster growth -- most obviously Taiwan and semi manufacturing, but does this explain why the UK has had faster manufacturing productivity growth?
5. Dispersion in productivity within manufacturing has gone up: from Joey and Acemoglu-Autor-Patterson
economics.mit.edu/sites/default/…
6. And the manufacturing productivity slowdown comes despite rising R&D in manufacturing!
ie: Ideas are getting harder to find, in manufacturing
libertystreeteconomics.newyorkfed.org/2025/01/the-rd…
6. Could the slowdown in manufacturing productivity be related to the fact that health costs aren't exploding any more?
Health spending/GDP has been flat over the same period that manufacturing productivity has been flat!
Has Baumol's cost disease -- AKA differential productivity growth -- been defeated by *slowing* goods productivity growth, rather than by *rising* services growth?
Maybe not, here's service-sector productivity growth
apricitas.io/p/americas-pro…
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