America’s “manufacturing renaissance” is a myth, claims report

The revival of the manufacturing sector in the US has been exaggerated, according to a new report.

The report, published by the Information Technology and Innovation Foundation think tank (ITIF), says that at the end of 2013 there were 2 million fewer manufacturing jobs in the US than there were before the recession, as well as 15,000 fewer manufacturing establishments.

In terms of output, real manufacturing value added was still 3.2% below 2007 levels, despite GDP growth of 5.6% over the same period.

The authors of the report, Adams Nager and Robert D. Atkinson, refute several popular beliefs that underpin the theory of a manufacturing revival, including the idea that Chinese wages are now approaching US levels, and that the US’s superior productivity growth will restore manufacturing jobs.

They conclude that the economic data do not support the idea of a manufacturing renaissance that has been promoted by some commentators and analysts in recent years.

IZA World of Labor author Edward P. Lazear has written about policy responses to higher unemployment following recessions. He writes that: "Knowing whether higher unemployment is caused by structural change in the labor market or whether the problem is cyclic determines how effective policy can be in addressing the problem."

Read more at The Guardian and download the full report here.