Real GDP grew 2.0 percent at the annual rate in the first quarter, boosted by strength in business spending but weighed down by softness in consumer spending, net exports and residential investment. According to new data from the Bureau of Economic Analysis, manufacturing added 0.40 percentage points to top-line growth in the first quarter, with that contribution equally split between durable and nondurable goods businesses. Real value-added output rose 3.4 percent for manufacturers in the first quarter, extending the 5.3 percent gain in the sector in the fourth quarter. It was the fifth straight quarter with manufacturing providing a positive contribution to real GDP, which has seen solid growth since the end of 2016. Improvements in the global economy and pro-growth policies have helped to buoy the sector, which has experienced healthy expansions in demand, production and hiring over that time frame.
Other top contributors to real GDP in the first quarter included finance, insurance, real estate, rental and leasing (0.61 percent), information (0.32 percent), educational services, health care and social assistance (0.19 percent), transportation and warehousing (0.19 percent), construction (0.17 percent), retail trade (0.17 percent) and professional and business services (0.12 percent). In contrast, decreases occurred in the arts, entertainment, recreation, accommodation and food services (-0.11 percent), other services, except government (-0.10 percent), utilities (-0.10 percent), government (-0.07 percent) and agriculture, forestry, fishing and hunting (-0.04 percent) sectors.
Overall, manufacturing gross output increased from $6.228 trillion in the fourth quarter to $6.347 trillion in the first quarter, a new all-time high. After struggling a few years ago on global headwinds, the manufacturing sector has improved notably since gross output bottomed out at $5.607 trillion in the first quarter of 2016. In addition, gross output from durable (up from $3.164 trillion to $3.210 trillion) and nondurable (up from $3.064 trillion to $3.137 trillion) goods also rose in the quarter, with the former reaching a new high and the latter notching the best reading since the third quarter of 2014.
Those findings closely mirrored the value-added data for manufacturing, which rose from $2.300 trillion in the fourth quarter to $2.330 trillion in the first quarter, also a new all-time high. Value-added output for durable goods increased from $1.243 trillion to $1.256 trillion, with nondurable goods value-added output rising from $1.058 trillion to $1.075 trillion. Both achieved new all-time highs. The bottom line is that manufacturing accounted for 11.7 percent of real GDP in the first quarter, up from 11.6 percent in the prior report.
Adjusting for inflation, a new all-time high also occurred for real value-added output in manufacturing, up from $1.984 trillion in the fourth quarter to $2.000 trillion. Those figures are in chained 2009 dollars. It bottomed out at $1.694 trillion in the first quarter of 2009 before beginning to trend higher. In the first quarter, real value-added output increased for both durable (up from $1.163 trillion to $1.172 trillion—a new high) and nondurable (up from $0.834 trillion to $0.841 trillion) goods.
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