By Ed Crooks in New York
Manufacturing employment has grown faster in the US than in any other leading developed economy since the start of the recovery, as productivity gains and subdued pay rises raise hopes for an American industrial renaissance.
The US has added more net manufacturing jobs since the start of 2010 than the rest of the Group of 7 developed countries put together, with only two other economies, Germany and Canada, increasing factory employment at all.
At 11.79m, employment in US manufacturing is still about 2m below its pre-recession levels. About 2.3m factory jobs were lost in 2007-09, and 328,000 jobs (seasonally adjusted) have been created since then.
However, hopes are rising that the US is entering a sustained manufacturing revival.
Since the start of 2010, manufacturing employment has risen 2.9 per cent in the US compared with 2.4 per cent in Germany and 1.9 per cent in Canada.
In Japan, the UK, Italy and France it has fallen.
Mark Zandi, chief economist of Moody?s Analytics, said: ?I think we are at an inflection point for manufacturing in the US. Employment in the industry has been in decline for decades but it is now at a point where it is going from quite strong to stronger.?
Productivity growth over the past decade and slow wage rises, combined with the decline in the dollar, have boosted US competitiveness. In 2002-10, US manufacturing unit labour costs in dollar terms fell 11 per cent, compared with rises of 3 per cent rise in Japan and 41 per cent in Germany.
The US has also been improving its relative cost position compared with China, where wages have been rising annually by 15 per cent or more for most of the past eight years.
Companies including Ford, Caterpillar, General Electric and Otis Elevator, owned by United Technologies, have announced manufacturing job creation plans in the US in the past couple of years. In some cases companies say that they plan to bring back to the US production previously done in emerging economies such as China and Mexico.
Higher oil prices, which raise transport costs, and the shale gas boom that has cut local energy bills, have also made the US a more attractive location.
However, executives and analysts warned that productivity gains through automation meant that it would be difficult to replace all the jobs that had been lost.
Brad Jensen, of the McDonough School of Business at Georgetown University, said: ?To call it a false hope would be too strong but we need to be clear-eyed: manufacturing is not really where the US comparative advantage lies.?
? The Financial Times Limited 2012