Missouri manufacturing is on rebound

By Kelvin Simmons

Director

Missouri Department of Economic Development

The manufacturing industry has long been a mainstay of Missouri's economy. However, employment in this industry has suffered greatly since the turn of the century. Productivity gains in the past two decades, the natural progression from an industrialized economy to the knowledge-based economy, and effects of the national recession are all mitigating factors that have impacted the manufacturing sector in Missouri recently.

Manufacturing employment had reached its most recent peak in May 1998 at 378,300 jobs. But by the middle of 1998, employment in this industry began to edge down, with decreases accelerating midway through 1999 until bottoming out in June 2003 at 309,200 -- a loss of just over 69,000 jobs.

Fortunately, the trend of job losses in Missouri's manufacturing industry began to turn around by July 2003, causing manufacturing employment to stabilize in Missouri earlier than much of the rest of the nation. Since then, manufacturing industries have added 7,700 jobs and we are very optimistic that high-tech, advanced manufacturing operations will continue to thrive here.

This turn around is good news for the state's economy as a whole, as many at the Department of Economic Development believed that Missouri's economic recovery from the national recession would ultimately hinge on improving conditions in the manufacturing sector.

Thanks to the forward-thinking leadership of Gov. Bob Holden early in his administration, advanced manufacturing was identified as one of the vital industries that hold promise for long-term growth in Missouri. His timely initiatives, such as the Jobs Now Act, are helping ensure that Missouri's manufacturing sector will continue to rebound and remain a mainstay of Missouri's economy for generations to come.

Several economic indicators do signify that the manufacturing sector is expanding and jobs are being created throughout this industry. And, as predicted, the rebound in the manufacturing sector is having good effects on the rest of the state's economy as well.

One positive indication that Missouri's manufacturing sector is rebounding comes from our Purchasing Managers Index (PMI) score, a leading economic indicator compiled by Creighton University. A score above 50 on this index is considered a sign of an expansionary economy for the next three to six months.

Missouri's PMI score has remained above 50 for nearly two and a half consecutive years. In fact, Missouri's PMI score of 67.9 in the month of March was the highest level recorded since October 1994 and it has remained strong in subsequent months.

Our PMI score for July was 65.4 and we are excited that the score remains at a level well above the critical expansionary mark. As a part of the elements this index measures, Missouri's manufacturing sector has consistently scored strongly in new orders, production, and employment.

Another sign of recovery is the obvious: employment numbers. Between June 2003 and June 2004, Missouri added more manufacturing jobs than all but three other states, gaining over 4,000 jobs. Our percentage growth during the period was more than twice the national growth rate.

In addition, the department's research division recently identified the top industries that drive Missouri's economy. Not surprisingly, we have a competitive advantage in several manufacturing sectors like motor vehicles, automatic merchandising machines, lumber and wood products, greeting card publishing, ammunition and paper products.

These indicators represent great news for our economy. There is no doubt that Missouri was one of the states hardest hit by manufacturing job losses during the recent recession. However, we are beginning to make up ground as the manufacturing sector continues to rebound. Due to the natural resilience of our diverse economy, we expect nothing less than for manufacturing to continue as one of our primary economic sectors, providing Missourians with good paying jobs and prosperity well into the future.