Manufacturing and the Dollar’s Value

New industrial output numbers, including for manufacturing, confirm a slowdown in at least part of the tradables sector.


Figure 1: Real value of the US dollar against broad basket (black, left scale), manufacturing production (red, right scale), manufacturing employment (blue, right scale), all in logs, 2013M01=0. Source: Federal Reserve Board, BLS, and author’s calculations.

Both production and employment now on a slight downturn, despite recent dollar depreciation. The dollar is 14% higher in log terms relative to mid-2014.

7 thoughts on “Manufacturing and the Dollar’s Value

  1. The Rage

    Sorry, but this was totally utility driven. You get rid of utilities, industrial production has been running at a constant rate since 2009. I ignore this index anyways as the government completely ruined it in the 90’s. I think you can see how they adjusted the long term trend.

      1. The Rage

        Is still includes utlities in that manufacturing, distorting the graph. US manufacturing is irrelevant anyways and real growth in the sector has slowed since the 50’s. The dollars impact on that is pretty meh.

        1. Menzie Chinn Post author

          The Rage: I do not understand. Straight from the Fed:

          Manufacturing consists of those industries included in the North American Industry Classification System, or NAICS, definition of manufacturing plus those industries—logging and newspaper, periodical, book, and directory publishing—that have traditionally been considered to be manufacturing and included in the industrial sector.

          The exact breakdown is here:

          I do not see utilities in the manufacturing index.

  2. AS

    Professor Chinn,
    Is there perchance a cointegration model between PAYEMS and INDPRO that is useful?

  3. Econstudent

    I am sorry if it is obvious, but shouldn’t we expect manufacturing sales and perhaps employment to have decreased following the rise in real value of USD ? The fact that they trend up together goes against my intuition but some explanation would be great. Analysing macro trends tends to leave me with more questions than answers or insights… please help

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