Sunday, July 8, 2012

Manufacturing gain impossible

There will be no magic gain in manufacturing numbers because it cannot happen. The US economic environment is poor with new orders down over 12 percent. Net exports are down 6%. Manufacturing activity is down 3.8 percent. The world economy is slowing, so there is not going to be a bigger pie for manufacturing sales. Manufacturing numbers around the world are all down. The only recent exception has been the UK which has seen significant sterling decline given their continued use of quantitative easing. The dollar has again been climbing so there is no gain from lower exchange rates. 

Finally, technology has been the great destroyer of jobs for those who are hard to employ. The economic studies have been very clear. Most of the decline in manufacturing over the last decade has been through productivity gains associated with increases in the use of technology. There are jobs with this technology but it is not going to those who have strong backs and poor education.  

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