SIJ - U.S. Manufacturing Outlook: Better Times Are Coming

2024-03-12 06:35:00 ET

Summary

• The US economy as a whole has been consistently surprising to the upside, but the manufacturing sector has been languishing.
• Even so, a growing belief in a soft landing and the potential for significant interest rate cuts could bring renewed vibrancy to the sector.
• Politics, trade and policy missteps are all potential threats to be aware of.

By James Knightley & Coco Zhang

US manufacturing sector composition

US manufacturing is a highly diversified sector that contributed $2.9tr to GDP in 2023, equivalent to just over 10% of all economic output. It also employed 13 million people, accounting for 8.3% of all US jobs. The sector can be split into two broad groupings. Firstly, there are final products & non-industrial supplies, which represent 54% of manufacturing output and includes the likes of cars, furniture and computers. The other 46% are classified as "materials", which includes the production of items such as textiles, paper, steel and manufactured parts that go into the former category of final products.

Breakdown of the US manufacturing sector

Note: consumer durable goods are goods that should last more than 3 years, such as vehicles and household appliances. Non-durable consumer goods include food, energy products (gasoline, heating oil, etc), clothing and cleaning products. Business equipment includes items such as transit vehicles and industrial equipment. Non-industrial supplies include construction sector and regular business supplies. ...

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