What tells you more about the economic situation in the US: manufacturing growth or employment rates?  Morningstar Research has been looking back at economic data from the last three decades and a clear pattern emerges. 

During times of recession, manufacturing falls; which naturally has a negative effect on an already worsening economic situation this leads to greater unemployment. During a recovery period, reaching a normal level of manufacturing happens before we see a rise in employment data.

Surprisingly this pattern of manufacturing moving first happens every time, which means that production grows significantly before companies start to hire more people. Usually people tend to look at the employment numbers in order to say something about manufacturing when actually, as this graph shows, it’s the other way around.

So what does this tell us about the US economy? Over the last 30 years the output of manufacturing goods has doubled in the US whereas employment has fallen by around a third. This trend is likely to continue.