U.S. Manufacturing Profits Remain Strong in Q3; Manufacturing Continues to Outpace the Economy

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

After-tax profits for U.S. manufacturing corporations were just short of $150 billion during the July-September period this year.  Profits for Q3 fell by 4.5% from Q2, but were 20.4% ahead of the same quarter last year, and were the second-highest quarterly profit total for U.S. manufacturers in history (see chart above). Compared to the $118.6 billion in profits for Q4 2007 when the recession started, manufacturing profits are now 26% above that pre-recession level. 

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

1. The 20.4% increase in manufacturing profits over the last four quarters through Q3 is more than four times greater than the 6.5% increase in profits after-tax for all U.S. corporations during that time period.  

2. While real GDP has increased by only 1.5% during the most recent four quarter period from 2010 Q3 to 2011 Q3, the manufacturing component of U.S. industrial production grew at almost three times that rate (4.22%) from September 2010 to September 2011.

3. Over the most recent 12-month period from November 2010 to November 2011, manufacturing employment grew by 1.82%, or almost four times the 0.46% growth in total payroll employment over that same period.   

4. For the last six months, 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: growth in profits, output gains, employment growth, and unemployment rates, American manufacturing remains the "shining star" of the U.S. economy.