Monday, March 26, 2012

Manufacturing Profits Set New Record in 2011


The Census Bureau reported today on fourth quarter financial results for the U.S. manufacturing sector, with the following highlights:

 1. After-tax profits for U.S. manufacturing corporations were just short of $600 billion in 2011, setting a new annual record. The $598.3 billion of profits for American manufacturers last year represented an increase of more than 25% from the $477.7 billion in profits the previous year, and follow a 67% gain in 2010. In contrast, the after-tax profits for all U.S. corporations are on track to increase by less than 5% for 2011 based on data currently available through the third quarter of last year, following a 19% increase in 2010.  

 2. The $600 billion in after-tax manufacturing profits is also more than 27% above the pre-recession high of $470.2 billion 2006, and more than double the annual profits in 2008 and 2009 of less than $300 in each of those years. In contrast, all corporate profits this year will be less than 10 percent higher than in 2006. 

3. On a quarterly basis, durable manufacturing had its most profitable quarter ever, with a record-setting $76.5 billion in profits for the October-December period.

The record profitability of U.S. manufacturing corporations last year is just one of several economic indicators that put America's industrial sector directly at the forefront of the economic recovery. For example:

1. While real GDP increased only 1.7% last year, the manufacturing component of U.S. industrial production grew at almost three times that rate (4.7%) in 2011, and increased by a even-higher 5.2% over the most recent 12-month period from February 2011 to February 2012.

2. Over the 12-month period from February 2011 to February 2012, manufacturing employment grew by 1.90%, compared to the 1.5% growth rate for total payroll employment over that same period.

3. For the last nine months from June 2011 to February 2012, the jobless rate for manufacturing has been below the national average, and is currently at 7.7% and a full half-point below the U.S. average of 8.2% (not seasonally adjusted).

By all relevant measures of economic performance: profits, output gains, employment growth, and unemployment rates, American manufacturing continues to lead the U.S. economy in the economic recovery.

18 Comments:

At 3/26/2012 1:40 PM, Blogger Benjamin said...

As I long expected, the braying about a "strong dollar" is entirely misplaced, in a modern economy.

A strong dollar is one that helps US business. We can see from robust exports and a healthy manufacturing sector, that a dollar in a more-sendible trading range is very salubrious for our economy.

We see from the Japan perma-deflationary recession what a "strong" currency brings---ruin.

The strong dollar crowd is practicing a sort of Theo-Monetarism, a sacred reverence for a premise that is false. That false premise is that a high exchange rate for a dollar is attached to moral rectitude and prosperity. False on both counts.

I wish the dollar would go lower.

PS The dollar actually sank on Bush jr's watch, and has more or less stayed there since. So give credit to Bush jr. if you must, but probably Bernanke a little more.

 
At 3/26/2012 1:49 PM, Blogger Jon Murphy said...

A weak dollar helps with exports but makes imports more expensive. Inversely, a strong dollar keeps imports cheap and exports become more expensive.

It's a fools argument whether one wants a strong currency or a weak one. What one should ideally want is a fairly valued currency.

 
At 3/26/2012 1:52 PM, Blogger PeakTrader said...

U.S. manufacturers offshored low-end products, rather than discontinue operations, and imported those goods at lower prices and higher profits.

Freed-up limited resources shifted into high-end products and emerging industries.

So, U.S. manufacturers also exported more high-end products for higher profits, because of market power.

While, emerging industries created and improved new products, also with market power.

 
At 3/26/2012 2:06 PM, Blogger Jon Murphy said...

U.S. manufacturers offshored low-end products, rather than discontinue operations, and imported those goods at lower prices and higher profits.

Freed-up limited resources shifted into high-end products and emerging industries.

So, U.S. manufacturers also exported more high-end products for higher profits, because of market power.

While, emerging industries created and improved new products, also with market power.


And folks all around the world are getting weather. It's a fabulous cycle, isn't it?

 
At 3/26/2012 2:17 PM, Blogger morganovich said...

the way this category is calculated has some real problems with it and significantly overstates profitability.

fabless semi companies like pmc sierra and platform companies like apple do not do their own manufacturing, and thus, are VERY profitable as a result, much more so that the folks who actual build the iphones or run the fabs.

 
At 3/26/2012 2:53 PM, Blogger PeakTrader said...

This comment has been removed by the author.

 
At 3/26/2012 3:45 PM, Blogger Buddy R Pacifico said...

What industries does the U.S. Cenusus Bureau consider Manufacturing?

Here are the 756 categories of North American Industry Classification System for:
Manufacturing.

Note that Petroleum Refineries are a subset of Manufacturing, and are now the #1 producer of U.S. exports.

 
At 3/26/2012 3:49 PM, Blogger Jon Murphy said...

Seeing as NAICS is part of the Census, I'm going to say that all 756 are considered manufacturing by the Census

 
At 3/26/2012 3:59 PM, Blogger Buddy R Pacifico said...

Jon Murphy states:

"Seeing as NAICS is part of the Census, I'm going to say that all 756 are considered manufacturing by the Census."

Yep, that's right Jon Murphy, and if you have any questions or comments, then contact:

John Murphy
Chair, Economic Classification Policy Committee
U.S. Census Bureau
SSSD HQ-8K157
4600 Silver Hill Road
Washington DC 20233

!!!

 
At 3/26/2012 4:03 PM, Blogger Jon Murphy said...

John Murphy
Chair, Economic Classification Policy Committee
U.S. Census Bureau
SSSD HQ-8K157
4600 Silver Hill Road
Washington DC 20233


Wait, is that really the guy's name?! How awesome is that?! No relation to me, though.

 
At 3/26/2012 4:08 PM, Blogger Buddy R Pacifico said...

Jon, that really is the guy's name. Check out this NAICS link and scroll down to bottom where it states who to contact: John Burns Murphy, Chair... !!!

 
At 3/26/2012 7:59 PM, Blogger VangelV said...

Since when is Apple a manufacturing company? And if it isn't why are you lumping its profits with companies that actually make stuff?

 
At 3/26/2012 9:24 PM, Blogger liberal_slayer said...

"Since when is Apple a manufacturing company?"

What planet are you living on?

 
At 3/26/2012 9:26 PM, Blogger liberal_slayer said...

"Since when is Apple a manufacturing company?"

What planet are you living on?

Have you ever heard of the iMac, iPod, iPhone, iPad? Apple designs, manufactures and sells these to people and the big box retail stores.

 
At 3/27/2012 6:54 AM, Blogger Ed R said...

Let's see record corporate profits in 2010 then exceeded in 2011 after a miserable 2008.

I guess we should thank President Obama for his wise pro-corporate economic policies.

 
At 3/27/2012 7:46 AM, Blogger PeakTrader said...

Ed R says: "I guess we should thank President Obama for his wise pro-corporate economic policies."

Yes, you can thank Obama for raising the cost of labor, to make capital spending relatively cheaper.

 
At 3/27/2012 8:06 AM, Blogger PeakTrader said...

So, corporations can make the existing workforce work harder with little pressure to increase wages, thanks to lots of unemployment.

 
At 3/27/2012 8:48 AM, Blogger PeakTrader said...

I'm sure, most office workers would prefer a $2,000 raise than a new $20,000 copier. So, the worker can be 5% more productive.

 

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