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What is going right in manufacturing?

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Abstract

This study looks into whether the manufacturing sector has experienced a stronger-than-expected recovery and identifies five potential drivers of the manufacturing sector’s strong performance—tax and regulatory reform, the shale energy boom, technological advances that reduced the labor needed to produce products, increased concerns about protecting intellectual property, and supply chain concerns. Our statistical analysis confirms the manufacturing sector experienced a resurgence in the post-Great Recession era. The Dynamic Factor Model (DFM) approach suggests the realized path of manufacturing employment was stronger than the historical trends. Business cycle analysis indicates the largest average growth rates are reported in the post-Great Recession era compared to other subsamples. Structural breaks are found in all variables. In our view, the policies and events of the past several years were able to stimulate consistent and lasting growth in the manufacturing sector.

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Notes

  1. The statistical techniques used here are covered in more detail in Silvia et al. (2014).

  2. It’s true that the dates found in the structural tests were all prior to the Trump Administration taking office. However, continuing forward momentum starting in 2017 would have been necessary to confirm the breaks.

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Authors and Affiliations

  1. Wells Fargo Securities, LLC, 550 South Tryon Street, D1086-041, Charlotte, NC, 28202, USA

    Mark Vitner

  2. Wells Fargo Securities, LLC, 375 Park Ave, MAC J0127-024, 2nd Floor, New York, NY, 10152, USA

    Azhar Iqbal

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  1. Mark Vitner
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  2. Azhar Iqbal
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Correspondence to Azhar Iqbal.

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Vitner, M., Iqbal, A. What is going right in manufacturing?. Bus Econ 54, 114–121 (2019). https://doi.org/10.1057/s11369-019-00130-x

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  • DOI: https://doi.org/10.1057/s11369-019-00130-x

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