National Economic Outlook - July 2018

Written By: Ingo Winzer, President Local Market Monitor, Inc.

Manufacturing is no longer the engine of the US economy, like it was 50 years ago, but it's had a rebirth of sorts over the last few years as companies in America find they can produce many products better and more cheaply than foreign manufacturers. A lot of these are intermediate products, specialty components - used in other products - where precision, speed of delivery, and adaptability to changing specifications are important to buyers, along with price. Two of the biggest job gainers have been machine shops - highly automated and flexible operations - and makers of structural metal products.

Two other expanding segments are producers of heavy equipment - mining and construction machinery, for example - and producers of industrial equipment - the automated machines that are the vital ingredient for sustained growth in the manufacturing sector. Production in these segments depends on creative design and heavy use of computer technology rather than low-cost mass production.

Aside from providing a boost to the economy in general, the new manufacturing jobs have a special impact on real estate markets because they provide fairly high pay. And because they tend to be mid-sized operations that can be located anywhere, they're quite likely to show up in markets where the cost of manufacturing is low but the workforce is skilled - such as Midwest markets with available land and a technical college nearby.

Real estate investors might want to assemble a list of such markets and keep track of new plant announcements.

Including the strong 2.3 percent increase in manufacturing jobs in the past year, total jobs increased 1.6 percent in June. Jobs were up 2.6 percent in business services, 2 percent in healthcare, 2 percent at restaurants, 1.5 percent in finance, and 0.5 percent in retail.