Manufacturing Value-Added Output Rose to $2.3 Trillion in the Fourth Quarter, Another All-Time High

Real GDP grew 2.9 percent at the annual rate in the fourth quarter, boosted by strength in consumer and business spending but weighed down by inventory spending and net exports. According to new data from the Bureau of Economic Analysis, manufacturing added 0.60 percentage points to top-line growth in the fourth quarter, with 0.44 and 0.16 percentage points from durable and nondurable goods businesses, respectively. Real value-added output jumped 5.3 percent for manufacturers in the fourth quarter, buoyed by a 7.2 percent growth rate for durable goods firms. Real value-added output for nondurable goods bounced back from a hurricane-induced decline in the third quarter to a 3.1 percent increase in the fourth quarter.

Other top contributors in the fourth quarter to real GDP included professional and business services (0.67 percent), construction (0.35 percent), wholesale trade (0.26 percent), retail trade (0.21 percent), educational services, health care and social assistance (0.18 percent), mining (0.17 percent), transportation and warehousing (0.16 percent) and utilities (0.13 percent). In contrast, decreases occurred in finance, insurance, real estate, rental and leasing (-0.18 percent), agriculture, forestry, fishing and hunting (-0.01 percent) and information (-0.01 percent).

Overall, manufacturing gross output increased from $6.031 trillion in the third quarter to $6.228 trillion in the fourth 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 $3.086 trillion to $3.164 trillion) and nondurable (up from $2.946 trillion to $3.064 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 $2.252 trillion in the third quarter to $2.300 trillion in the fourth quarter, also a new all-time high. Value-added output for durable goods increased from $1.224 trillion to $1.243 trillion, with nondurable goods value-added output rising from $1.028 trillion to $1.058 trillion. Both achieved new heights. The bottom line is that manufacturing accounted for 11.6 percent of real GDP in the fourth quarter, up from 11.5 percent in the prior report.

Adjusting for inflation, a new all-time high also occurred for real value-added output in manufacturing, up from $1.958 trillion in the third quarter to $1.984 trillion in the fourth quarter. 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 fourth quarter, real value-added output increased for both durable (up from $1.143 trillion to $1.163 trillion—a new high) and nondurable (up from $0.827 trillion to $0.834 trillion) goods.

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM) and the Director of the Center for Manufacturing Research for The Manufacturing Institute, where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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