Fitch Ratings-New York/London-04 June 2025: Technological progress has accounted for a large part of the steadily declining share of manufacturing in US nominal GDP in the past 50 years, underscoring the challenges that the US could face in seeking to boost the manufacturing sector in the economy, Fitch Ratings says in a new report.
Increasing the manufacturing sector’s role in the US economy appears to be an important objective for the new US administration. Reshoring manufacturing capacity and jobs is frequently cited as a justification for raising tariffs; this, it is argued, will help substitute imports with domestic production of goods.
But analysis of the decline in the share of manufacturing in GDP and employment suggests that a faster rate of labour productivity growth in manufacturing relative to the wider economy has been a key driver. This fundamental technological trend is unlikely to be affected much by higher tariffs.
Manufacturing output accounted for a quarter of US nominal GDP in 1960, but this share has slumped to 10%. However, if the share of manufacturing is measured in real terms, the situation is very different. Real GDP and real manufacturing output have both risen by about 550% since 1960. The share of manufacturing in real GDP is the same now as in 1960.
The contrast between the trend in the manufacturing share in nominal versus real terms reflects a fall in the relative price of manufacturing output. Differential price trends reflect, in turn, faster manufacturing productivity growth. Average hourly wages in manufacturing and the economy as whole have moved in lockstep, but the amount of labour needed to produce a given level of output has fallen much more quickly in manufacturing. This differential in relative unit labour cost growth explains the fall in the relative price of manufacturing output.
Información extraída de: https://www.larepublica.co/opinion/editorial/una-tendencia-economica-fuerte-y-silenciosa-4140725
