Goldman Sachs Questions Emphasis on Manufacturing

July 24, 2019

Daan Struyven, an analyst at Goldman Sachs, cautions against the over-emphasis of manufacturing when measuring the U.S. economy because it only makes up 10 percent of GDP.  "The over representation of manufacturing in the official statistics reflects its previous dominant role in the economy, combined with the tendency for statistical systems and methods to change only slowly," he wrote in a note dated July 19. "We warn against putting excessive weight on ups and downs in manufacturing data."

Struyven cited three factors for the warning:
• Manufacturing output and employment shares have declined over the past 70 years;
• Volatility of manufacturing output has declined due to better inventory management; and
• Non-manufacturing and manufacturing activity have become less correlated.



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