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CMA2012: Manufacturing Economic Update
 

CMA2012: Manufacturing Economic Update

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Dr. Chad Moutray, Chief Economist at the National Association of Manufacturers, provide the CEO’s of US Manufacturing Trade Associations a snapshot of what’s happening in manufacturing and the US ...

Dr. Chad Moutray, Chief Economist at the National Association of Manufacturers, provide the CEO’s of US Manufacturing Trade Associations a snapshot of what’s happening in manufacturing and the US economy.

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    CMA2012: Manufacturing Economic Update CMA2012: Manufacturing Economic Update Presentation Transcript

    • THE MANUFACTURING ECONOMIC UPDATE Dr. Chad Moutray Chief Economist National Association of Manufacturers Updated July 27, 2012
    • Real Gross Domestic Product (Chained 2005 Dollars) 6% Forecast 4% 2% 0% -2% -4% Real GDP Forecast: ↑ 1.7% (2011) -6% ↑ 2.0% (2012) ↑ 2.0% (2013) -8%Source: Bureau of Economic Analysis, NAM calculations using Moody’s Analytics simulation model
    • Percentage Growth in Real GDP and Contributions to Real GDP of Goods and Services 5.0% 4.0% 4.1% 3.0% 2.6% 2.5% 2.4% 2.3% 2.0% 2.2% 2.0% 1.5% 1.3% 1.0% 1.1% 1.1% 1.1% 1.0% 1.0% 0.9% 0.9% 0.9% 0.9% 0.9% -0.1% -0.1% -0.1% -0.2% 0.8% 0.7% 0.4% 0.5% 0.0% 0.5% 0.4% 0.7% 0.1% 0.5% 0.7% 0.4% 0.3% 0.2% 0.3% 0.6% 0.3% 0.0% Q1:2010 Q2:2010 Q3:2010 Q4:2010 Q1:2011 Q2:2011 Q3:2011 Q4:2011 Q1:2012 Q2:2012 -1.0% Real GDP Durable Goods Nondurable Goods ServicesSource: Bureau of Economic Analysis
    • Personal Income/ Savings Rate Spending (% Change) Personal Income and Spending Percentage 1.4 7.0 1.2 6.0 1 5.0 0.8 0.6 4.0 0.4 3.0 0.2 2.0 0 2011 2010 2012 1.0 -0.2 -0.4 0.0 Personal Income Personal Spending Savings RateSource: Bureau of Economic Analysis
    • Manufactured Durable Goods (in Billions of Dollars) $260 $240 $220 $200 $180 $160 $140 $120 2011 2005 2006 2007 2008 2009 2010 2012 New Orders ShipmentsSource: U.S. Census Bureau
    • Industrial Production/ Capacity Utilization % Industrial Production 105 100 95 90 85 80 75 70 65 60 2005 2006 2007 2008 2009 2010 2012 2011 Industrial Production Capacity UtilizationSource: Federal Reserve Board
    • # of Mfg. Industries (19) Manufacturing Production 1 month IP change (%) 5% 16 11 3% 6 1% 1 -4 -1% -9 -3% -14 -19 -5% Number of Mfg Industries Increasing Number of Mfg Industries Decreasing Percent Change in Mfg ProductionSource: Federal Reserve Board
    • Percent % Changes in Manufacturing Production, 2011-2012 21.5 10.5 0-0.5 -1-1.5 Manufacturing Durable Goods Nondurable Goods
    • ISM Manufacturing Indices 70.0 60.0 50.0 40.0 30.0 20.0 Purchasing Managers Index New Orders Index Employment Index Inventories IndexSource: Institute for Supply Management
    • Index for all but Regional Federal Reserve Bank Chicago (Growth >0) Manufacturing & Business Surveys Chicago Index (2007=100) 50.0 100 40.0 95 30.0 90 20.0 10.0 85 0.0 80 2011 2010 2012 -10.0 75 -20.0 -30.0 70 Dallas Kansas City New York Philadelphia Richmond ChicagoSource: Regional Federal Reserve Banks
    • Monthly Business and ConsumerConsumer NFIB SmallConfidence Indices Sentiment Surveys Business Index120 110110 105100 100 90 80 95 70 90 60 85 50 80 40 30 75 20 70 2005 2006 2007 2008 2009 2010 2012 2011 University of Michigan Consumer Confidence Conference Board Consumer Confidence NFIB Small Business Optimism
    • Percent Pricing Pressures 2.5 2.0 1.5 1.0 0.5 0.0 2010 2012 2011 -0.5 -1.0 -1.5 PPI - Manufactured Finished Goods PPI - Finished Goods PPI - Finished Goods Less Food & EnergySource: Bureau of Labor Statistics
    • Net % of Lending Standard and Borrowing Demand Respondents For Commercial & Industrial Loans 35 31 28.1 27.3 25 21.8 21.8 20 19.7 16.4 13.5 15.1 15 10.5 10.5 8.8 9.1 9.6 7.1 7.1 7.8 6.9 5.5 5.9 6.2 5.6 5.8 5 1.8 1.9 1.8 0 -5 Q1:2010 Q2:2010 Q3:2010 Q4:2010 Q1:2011 Q2:2011 Q3:2011 Q4:2011 Q1:2012 -1.9 Q2:2012 -3.7 -3.6 -5.4 -7.1 -7 -9.3 -15 -15.7 -18.8 -21.4 -25 -25.5 -29.6 -35 Easing of standards for large & medium-sized borrowers Easing of standards for small borrowers Stronger demand from large & medium-sized borrowers Stronger demand from small borrowersSource: Federal Reserve Board of Governors
    • Monthly Changes in Employment (Thousands of Employees)300 275 259 246 251250 223 220 202200 157150 143 110 112 96100 84 85 80 77 68 52 54 52 42 37 50 30 26 28 28 30 8 12 9 10 9 11 3 -3 3 0-50 Nonfarm Payrolls Manufacturing
    • Millions of Workers Employment Situation Unemployment Rate 14 11% 13 10% 12 9% 11 8% 10 7% 9 6% 8 7 5% 6 4% Durable Goods Nondurable Goods Unemployment RateSource: Bureau of Labor Statistics
    • Manufacturing Sectors with the Largest Net Employment Gains YTD, in Thousands of Employees (December 2009 to June 2012) Fabricated Metal Products 149.7 Transportation Equipment 148.9 Machinery 132.6 Motor Vehicles and Parts 122.6 Primary Metals 63.2 Plastics and Rubber Products 33.7 Semiconductors and Electronic Components 24.8 Electrical Equipment and Appliances 20.1 Computer and Electronic Products 16.8 Beverages and Tobacco Products 14.2 Miscellaneous Manufacturing 13.9 Food Manufacturing 7.8 Computer and Peripheral Equipment 6.6 Chemicals 3.8 Leather and Allied Products 2.0 Petroleum and Coal Products 1.3Source: Bureau of Labor Statistics
    • Top 20 States for Manufacturing Job Creation, December 2009 to June 2012 (in Thousands of Workers) Michigan 64.0 Ohio 49.2 Indiana 48.4 Texas 45.7 Illinois 42.9 Washington 28.1 Wisconsin 26.4 Iowa 21.0 Minnesota 18.4 South Carolina 17.7 Tennessee 16.9 Oklahoma 15.1 Pennsylvania 12.1 Kentucky 12.0 Georgia 9.1 Missouri 8.9 Utah 8.5 Kansas 6.9 Oregon 6.6 Colorado 6.6 North Carolina 5.3Source: Bureau of Labor Statistics
    • Manufacturing Employment Growth (December 2007 = 100) 105 100 95 90 85 80 75 Nonfarm Payrolls Manufacturing Durable Goods Nondurable GoodsSource: Bureau of Labor Statistics
    • Manufacturing Job Hires & Separations (January 2007 to April 2012) 550 500 450 400 350 300 250 200 150 100 50 2011 2007 2008 2009 2010 2012 Job Openings Hires SeparationsSource: Bureau of Labor Statistics
    • Growth in Output per Hour for Manufacturing & Nonfarm Businesses (1987=100) 290 270 250 230 210 190 170 150 130 110 90 1990 1987 1993 1996 1999 2002 2005 2008 2011 Manufacturing Durable Goods Nondurable Goods Nonfarm BusinessSource: Bureau of Labor Statistics
    • Percentage Changes in Manufacturing Productivity & Unit Labor Costs 13% 10.0% 7.8% 9.2% 7.8% 8% 5.7% 5.6% 5.4% 5.2% 4.8% 4.7% 5.2%4.9% 3.8% 4.0% 3% 1.6% -0.2% 0.6% 0.0% 0.6% -2% Q1:2010 Q2:2010 Q3:2010 Q4:2010 Q1:2011 Q2:2011 Q3:2011 Q4:2011 Q1:2012 -1.3% -0.5% -2.0% -1.9% -2.5% -4.2% -4.9% -7% -7.1% -12% Output Per Hour for All Persons Output Unit Labor CostsSource: Bureau of Labor Statistics
    • Average Private Sector Value-Added Contributions to Real GDP, 1998-2011 Manufacturing 12.7% Real estate, rental, and leasing 12.5% Professional and business services 11.6% Finance and insurance 7.9% Education and healthcare 7.7% Retail trade 6.6% Wholesale trade 5.8% Information 4.5% Construction 4.4%Arts, entertainment, recreation, accommodation… 3.8% Transportation and warehousing 2.9% Other Services 2.6% Utilities 1.8% Mining 1.4% Agriculture 1.0%Source: U.S. Department of Commerce
    • Manufacturing Value-Added Per Worker United States $118,419 Japan $92,960 United Kingdom $84,565 Republic of Korea $76,346 Canada $71,529 France $63,992 Germany $60,842 Italy $56,208 Spain $51,576 Mexico $28,226 India $28,051 Brazil $14,105 China $13,266Source: United Nations, Bureau of Labor Statistics, International Labor Organization
    • Manufacturing and Business R&D Information 13% Professional, Scientifi c & Technical Services 14% Manufacturing 67% Other Nonmanufacturing Businesses 6%Source: National Science Foundation
    • Manufacturing’s Multiplier Effect Indirect Economic Activity Generated by $1 of Sector GDP Manufacturing $1.35 Agriculture, Forestry, Fishing, and Hunting $1.20 Construction $0.97 Transportation and Warehousing $0.95 Information $0.88 Arts, Entertainment, Recreation, Accommodation, and Food… $0.84 Mining $0.82 Government $0.74 Other Services, Except Government $0.67 Educational Services, Health Care, and Social Assistance $0.66 Finance, Insurance, Real Estate, Rental, and Leasing $0.63 Wholesale Trade $0.58 Professional and Business Services $0.55 Retail Trade $0.55 Utilities $0.52Source: Bureau of Economic Analysis, 2010 Annual Input-Output Tables
    • Global Manufacturing Output U.S. Still Dominates Manufacturing Worldwide, with China Close Behind 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 United States China (World Bank) Japan Germany Republic of Korea Italy United Kingdom France India MexicoSource: United Nations Statistics Division, with China data from the World Bank.
    • Distribution of U.S. Exports Services 30% Agriculture 6% Manufacturing 60% Other 4%Source: U.S. Department of Commerce Source: U.S. Department of Commerce (2007)
    • % Growth of Manufactured Goods Exports 25.0% 23.7% 19.6% 20.0% 17.2% 16.2% 16.4% 14.5% 15.1% 15.0% 13.0% 12.1% 11.8% 11.2% 11.5% 10.0% 8.2% 5.2% 5.0% 0.0% Canada Mexico FTA Europe Asia South TOTAL America Annual Change, 2011 vs. 2010 Year-to-Date, Q1:2012 vs. Q1:2011Source: U.S. Department of Commerce
    • Housing Starts, Permits NAHB Housing (in thousands of units) Housing Market Situation Market Index 2,500 80 70 2,000 60 1,500 50 40 1,000 30 20 500 10 0 0 2011 2006 2005 2007 2008 2009 2010 2012 Housing Starts Housing Permits NAHB Housing Market IndexSource: U.S. Census Bureau, National Association of Home Builders
    • Federal Government Receipts & Expenditures as a % of Gross Domestic Product, 1947 to Present 28% 26% 24.0% 24% 22% 20% 18% 16% 14% 17.5% 12% 10% 1947 80 Federal Receipts as a % of GDP Federal Expenditures as a % of GDPSource: Bureau of Economic Analysis
    • Manufacturing Business Outlook 100% 89.1% 88.7% 90% 86.4% 86.1% 84.8% 83.1% 81.9% 80.2% 78.4% 78.5% 80% 74.0% 73.1% 71.6% 69.6% 70% 65.4% 60% 52.8% 47.6% 46.3% 50% 40%Source: NAM/Industry Week Survey of ManufacturersNote: Percentage of respondents who characterized the current business outlook at somewhat or very positive. Percentagesare annual averages. Q4:2010 and Q1:2011 data are imputed from comparable data using a regression model.
    • Regressing NAM/IndustryWeek Data to Predict Future Industrial Production105100 95 90 85 80 75 Industrial Production Industrial Production (Predicted)
    • Expected Growth of Manufacturing Percent Sales, Investment, and Employment 6 5 4 3 2 1 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q1:12 Q2:12 -1 -2 Sales Investment Employment Avg. 12-Mo. Growth Rates:Source: NAM/Industry Week Survey of Manufacturers Sales: ↑ 4.3%Note: Expected growth rates are annual averages. Investment: ↑ 2.5% Employment: ↑ 1.9%
    • Primary Current Business Challenges, Second Quarter 2012 Unfavorable business climate 64.0% (e.g., taxes, regulation, etc.) Rising energy and raw material costs for our products 46.4% Weaker domestic economy, sales for our products 46.1% Attracting and retaining a quality workforce 45.6% Rising insurance costs 43.1% Increased international competition 23.5% Challenges with access to capital or other forms of 7.8% financing Other 7.5%Source: NAM/Industry Week Survey of ManufacturersNote: Respondents were able to check all that apply. Therefore, responses exceed 100 percent.
    • Primary Drivers of Future Growth, Second Quarter 2012 Stronger domestic economy, sales for our products 67.5% New product development 55.5% Increased efficiencies in the production process 52.5% Increased international sales 39.5% Recent mergers or acquisitions 12.5% Other 5.9%Source: NAM/Industry Week Survey of ManufacturersNote: Respondents were able to check all that apply. Therefore, responses exceed 100 percent.
    • Questions? Dr. Chad Moutray Chief EconomistNational Association of Manufacturers cmoutray@nam.org (202) 637-3148