Industry output and employment projections to 2012: employment in the dominant service-providing sector is expected to grow at a slower pace than in the 1992-2002 period, thereby slowing the projected growth in total employment

Monthly Labor Review, Feb, 2004 by Jay M. Berman

Manufacturing. This sector's share of total employment is expected to continue to decline, while its share of total output is projected to be maintained--reversing its trend in the prior decade. Reflecting an average annual employment decline of 0.9 percent and an absolute job loss of 1.5 million from 1992 to 2002, manufacturing employment represented only 10.6 percent of total employment in 2002, down from almost 14 percent in 1992. During this decade, manufacturing employment peaked in 1998 at 17.5 million, up from 16.8 million in 1992. The projected, productivity-led declines in this sector's employment, even though relatively moderate at 158,000, will slightly lower its share of total employment to 9.2 percent in 2012. This translates into 15.2 million wage and salary manufacturing jobs maintained in 2012. Even though the 15.3 million jobs counted in 2002 represents the trough of the 2001 recession, the 2.3 million jobs lost since 1998 are not expected to be recovered.

Up against the dramatic historical output gains in the service-providing sector, the 2.3-percent average annual increases and the $773.4 billion worth of additional real output that was generated by the manufacturing sector between 1992 and 2002 was not enough for this sector to maintain its 25.9 percent nominal output share in 1992--dropping to 21.1 percent by 2002. However, due to somewhat moderate output growth expectations in the service-sector and an accelerated manufacturing output growth prospect over the projected period, manufacturing's 2002 share of total nominal output is projected to be maintained. Consistent with overall economic growth, real output for manufacturing is expected to increase at an average annual rate of 3.4 percent between 2002 and 2012--faster than the 1992-2002 historical 2.3 percent rate, and rivals the service-producing sector's projected 3.5 percent annual growth rate. Led by productivity gains and strong demand by consumers, businesses, and exports, manufacturing output is expected to increase by $1.5 trillion to reach $5.4 trillion by 2012.

The industry manufacturing groups that will lead the pace of output growth are: computer and electronic products manufacturing (11.8 percent); plastics and rubber products manufacturing (4.1 percent); machinery manufacturing (4.0 percent); and fabricated metal products manufacturing (3.4 percent). The industry groups that will contribute the strongest drags on employment are: apparel manufacturing (-11.0 percent); textile mills (6.1 percent); and leather and allied product manufacturing (4.0 percent). These industries are also projected to be the only manufacturing sources with declining output.

The computer and electronic products manufacturing group, which includes computer, communications, semiconductor, and navigational production, highlights the dichotomist relationship between the growth of manufacturing output and the productivity led declines in employment. For example, with a 24.2-percent projected growth rate, the computer and peripheral equipment manufacturing industry has the fastest growing real output of any detailed industry for which BLS prepares projections. Reaching $2.3 trillion by 2012, a $2.0 trillion increase over its 2002 output level, this industry is also the economy's largest source of projected output growth. (See table 7.) However, due to the introduction of new technology and automated manufacturing processes, this industry's employment is expected to exceed its 2.7 percent historical rate of decline, and lose 68,000 jobs over its 2002 level of 250,000. (14)