#25 – Inside Our Industry – IndicatorsPosted on
Manufacturing is the lifeblood of Agracel. We monitor a number of industry indicators that measure the health of the industry. This year has provided some of the most uncertain times many of us have ever experienced. We cling to the hope that as we navigate the COVID-19 pandemic’s course, an end is imminent. It is with cautious anticipation that we look toward our new “normal”. In the meantime, we want to share a few of the indicators we follow and the upward trend we are seeing.
Institute for Supply Management’s Manufacturing PMI Index measures expansion or contraction of manufacturing in the U.S.
American Chemistry Council’s Chemical Activity Barometer – The CAB is a leading economic indicator derived from a composite index of chemical industry activity. Due to its early position in the supply chain, chemical industry activity has been found to consistently lead the U.S. economy’s business cycle, and the barometer can be used to determine turning points and likely trends in the broader economy. (It is generally paired with the Industrial Production Index.) Month-to-month movements can be volatile, so a three-month moving average of the CAB reading is provided. This provides a more consistent and illustrative picture of national economic trends.
Labor Productivity is a measure of economic performance that compares the amount of goods and services produced (output) with the number of hours worked to produce those goods and services.
Since its peak in 1979, manufacturing employment in the U.S. has been on the decline, accelerating sharply around the turn of the century. Despite modest gains since 2010, the number of manufacturing jobs remains far below previous levels. According to data from the U.S. Bureau of Labor Statistics (BLS), manufacturing accounted for more than 13 percent of the U.S. nonfarm workforce in 1999, or 17.3 million jobs. As of 2019, just 8.5 percent of workers were employed in the manufacturing sector, totaling less than 13 million jobs. (IndustryWeek.com)
Interestingly, at the same time that manufacturing jobs have moved overseas, manufacturing output—measured as the value of goods and services produced in the U.S.—has increased steadily. In fact, the BLS’s index of labor productivity for manufacturing is 2.5 times greater than it was in 1987 (the earliest year for which the data is available) due to advances in machinery, increased worker skill, and improved industrial processes. (IndustryWeek.com)
We are hopeful for brighter days ahead and are looking forward to 2021.