by Raymond J. Keating-
Manufacturing effectively has been in a recession during 2019. That’s why the bounce back in manufacturing output, as well as in overall industrial production in November, as reported by the Federal Reserve, is so welcome.
Industrial production grew by 1.1 percent in November, after declines in October and September.
And manufacturing production – the biggest chunk of industrial production – also expanded by 1.1 percent, again after declines in October and September.
The end of a strike in auto manufacturing was a major plus. As reported, “Excluding motor vehicles and parts, the indexes for total industrial production and for manufacturing moved up 0.5 percent and 0.3 percent, respectively.” But it’s important that both were still positive gains.
Industrial production in November was still off from a recent high in December of last year, with the same being the case with manufacturing (as noted in the following chart).
Source: Federal Reserve Bank of St. Louis,. FRED
Manufacturing has been hit hard by misguided trade policies that have created uncertainty, raised costs and reduced opportunities. That, of course, has meant trouble for small businesses, given that 74.7 percent of manufacturers have fewer than 20 employees and 93.5 percent fewer than 100 workers.
Once and if trade policy shifts towards a free trade, pro-growth path, that will be good news for small business manufacturers and their employees.
Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.