The state of American manufacturing and industrial production continues to face significant challenges, as recent data reveals a worrying trend. In November 2024, US industrial production unexpectedly fell by 0.1%, marking the third consecutive month of decline. This follows a downwardly revised drop of 0.4% in October, which had initially been expected to show a 0.3% increase according to Bloomberg economists [789370fb]. Manufacturing output saw only a modest rise of 0.2% after a revised decline of 0.7% in the previous month, highlighting ongoing struggles within the sector [789370fb].
The decline in industrial production is largely attributed to significant drops in mining and utilities, with mining experiencing its largest decline since May and utilities output decreasing the most in four months [789370fb]. Notably, the resolution of the Boeing Co. machinists' strike did not lead to an expected boost in aerospace equipment output, further complicating the manufacturing landscape [789370fb]. Manufacturing accounts for three-fourths of total industrial production, underscoring its critical role in the overall economy [789370fb].
In the broader context, the manufacturing sector has been grappling with a notable decline in job numbers and production output. Over the past three months, the sector lost 78,000 jobs, with 46,000 of those in October alone. This downturn follows a loss of 6,000 jobs in September and 26,000 in August, primarily driven by disruptions in the transportation equipment manufacturing industry due to strikes at major companies like Boeing and Textron [12d49706].
The economic landscape is further complicated by high borrowing costs and sluggish global export markets, which pose significant challenges for domestic manufacturers [789370fb]. A Deloitte study predicts that the U.S. will need 3.8 million new workers in manufacturing by 2033, with half of those jobs likely to remain unfilled due to a skilled labor shortage exacerbated by offshoring and automation [0b60af3c]. Yushiro Kato, CEO of CADDi Inc., emphasizes the importance of a strategic long-term commitment to rebuilding the manufacturing sector, which has seen a 0.4% annual revenue dip over the past five years [0b60af3c].
Hurricanes Milton and Helene have also complicated the manufacturing situation, contributing to a 0.1 percentage point reduction in October production [e155d771]. Overall, the manufacturing sector has experienced a decline of 85,000 jobs (0.7%) in the last six months and a drop of 50,000 jobs (0.4%) over the past year [12d49706]. In contrast, November 2023 marked a rebound with a gain of 25,000 jobs, suggesting potential recovery [12d49706].
A recent survey by Creighton University economist Ernie Goss indicated that Iowa's economy declined in November 2024, with 38.7% of manufacturers citing supply chain disruptions as their primary challenge and 27.8% pointing to inflation [de053bf3]. The overall economic score fell below growth neutral for the sixth time this year, with stagnant hiring and a loss of about 90,000 manufacturing jobs nationally in 2024 [de053bf3].
The National Association of Manufacturers is advocating for tax incentives and regulatory relief to support the struggling industry, highlighting the urgent need for policy changes to bolster employment and economic stability in manufacturing [12d49706]. Boeing's deliveries have also suffered, with only 14 jetliners delivered in October, the lowest in nearly four years, reflecting the severe impact of strikes and high borrowing costs [e155d771].
In terms of technology, demand for manufacturing technology has declined sharply, with machine tool orders falling by 14.5% from September to October 2024, totaling $385 million. This represents a year-over-year decline of 5.5% compared to October 2023 [c89f60e3]. The American Machine Tool Distributors' Association (AMT) reports that uncertainty in economic growth and ongoing strikes have led contract machine shops to reduce orders, although aerospace manufacturers have increased their orders, achieving the highest monthly level in 2024 [c89f60e3].
As inflation remains a pressing issue, with 39.1% of supply managers citing it as their top challenge, the outlook for the manufacturing sector remains uncertain [7ce601b0]. The need for significant reinvestment in infrastructure, realigning tax policies, and addressing the skilled labor crisis is critical for reversing current trends [0b60af3c]. The future of American manufacturing hinges on embracing rapid transformation and strategic investments in workforce training and development to fill the anticipated labor gaps [0b60af3c].