22 March 2012

Manufacturing Employment Wiggles and Trends

Above is a graph from the St. Louis Fed's excellent data portal which shows manufacturing employment in the US (blue), Germany (black) and Japan (red) from 1990 to 2010 (2011 for the US, note 100 = the series average over 1990 to 2010). The data clearly show that each of these three big manufacturing powerhouses have seen about the same proportional decline in manufacturing employment. Claims that Japan or Germany have not seen the same declines in manufacturing employment as the US are watching wiggles not trends.

The wiggles are important as they can represent the effects of policies aimed at reducing the impacts of recessions. But the trend is important as well, and seeing the same trend in manufacturing employment across three of the world's largest economies is pretty strong evidence that there is a single over-whelming dynamic at play - productivity growth in manufacturing.