Chart of manufacturing production by China, USA, Japan and Germany from 1999 to 2011. The chart was created by the Curious Cat Economics Blog using UN data. You may use the chart with attribution. All data is shown in current USD (United States Dollar).

The story of global manufacturing production continues to be China’s growth, which is the conventional wisdom. The conventional wisdom however is not correct in the belief that the USA has failed. China shot past the USA, which dropped into 2nd place, but the USA still manufactures a great deal and has continually increased output (though very slowly in the last few years).

The story is pretty much the same as I have been writing for 8 years now. The biggest difference in that story is just that China actually finally moved into 1st place in 2010 and, maybe, the slowing of the USA growth in output (if that continues, I think the USA growth will improve). I said last year, that I expected China to build on the lead it finally took, and they did so. I expect that to continue, but I also wouldn’t be surprised to see China’s momentum slow (especially a few more years out – it may not slow for 3 or 4 more years).

As before, the four leading nations for manufacturing production remain solidly ahead of all the rest. Korea and Italy had manufacturing output of $313 billion in 2011 and Brazil moved up to $308 are in 4-6 place. Those 3 countries together could be in 4th place (ahead of just Germany). Even adding Korea and Italy together the total is short of Germany by $103 in 2011). I would expect Korea and Brazil to grow manufacturing output substantially more than Italy in the next 5 years.

The country supposedly growing their manufacturing the most in the last 10 years is Russia, up 375%. Frankly I don’t believe that data accurately reflects reality. China is next, up 346%. Followed by Indonesia up 345.6%, Brazil up 280%, India up 255%, South Korea up 163% and then Germany up 95%. The figures are all in current USD, inflation alone would result in an increase of about 27% for the period. The slowest gains in manufacturing output are the UK (up just 21%), USA up 32%, Japan up 33% and France up 43%.

Chart of manufacturing production from 1999 to 2011 by the 5th through 14th largest manufacturing countries. The chart was created by the Curious Cat Economics Blog using UN data. You may use the chart with attribution. All data is shown in current USD (United States Dollar).

Of course, when looking at economic data all sorts of questions can be raised. My not believing the Russia data, for example. Also even accepting an inflation of 27% for the economy as a whole, for many manufactured goods that may not be very accurate. And using US $ for everyone creates some issues based on foreign exchange movements (so a country could actually produce 10% more in their own currency but if that currency fell 20% against the $ then they would show a 10% decline in manufacturing output). The data has weaknesses that have to be understood. Even so the data is useful and provides a very good long term picture of what is really going on economically.

I actually believe the USA’s 10 year figure is a discrepancy, but we will see how things shape up in the next 5 to 10 years. The USA had some very bad years from 2006 to 2009.

I expect in the next 10 years Indonesia and Brazil will do quite well and have a great shot at being among the tops in this group of the 14 leading manufacturing countries. China will likely do well, but I think growth will slow and it may well fall back from the lead (though likely remain somewhat near the top). India could do well, but their continued failure to address infrastructure and corruption problems make it very challenging. If they successfully addressed those they could easily be in the lead. I doubt they will though, so I expect them to be held back. Mexico has a chance to do very well, though they also have problems to deal with.

A bunch of the leading countries will struggle to grow significantly. The USA, Japan, Germany, Italy, Russia, France, UK, Spain and Canada are not likely to do fantastically. I would expect the USA to be near the top of this group. That leaves Korea as a country I think can outperform all in the previous sentence but to have trouble keeping up with any of the countries in the previous paragraph that don’t create problems for themselves.

Related: Manufacturing Output as Percent of GDP from 1980 to 2010 by Country – Manufacturing Employment Data: USA, Japan, Germany, UK and more, 1990 to 2009 – Top 15 Manufacturing Countries in 2009 – How Accurate is Manufacturing Data? – Top 12 Manufacturing Countries in 2007

The chart below shows manufacturing production by country as a percent of GDP of the 10 countries that manufacture the most. China has over 30% of the GDP from manufacturing, though the GDP share fell dramatically from 2005 and is solidly in the lead.

Nearly every country is decreasing the percentage of their economic output from manufacturing. Korea is the only exception, in this group. I would expect Korea to start following the general trend. Also China has reduced less than others, I expect China will also move toward the trend shown by the others (from 2005 to 2010 they certainly did).

For the 10 largest manufacturing countries in 2010, the overall manufacturing GDP percentage was 24.9% of GDP in 1980 and dropped to 17.7% in 2010. The point often missed by those looking at their country is most of these countries are growing manufacturing, they are just growing the rest of their economy more rapidly. It isn’t accurate to see this as a decline of manufacturing. It is manufacturing growing more slowly than (information technology, health care, etc.).

This chart shows manufacturing output, as percent of GDP, by country and was created by the Curious Cat Economics Blog based on UN data. You may use the chart with attribution.

The manufacturing share of the USA economy dropped from 21% in 1980 to 18% in 1990, 15% in 2000 and 13% in 2010. Still, as previous posts show, the USA manufacturing output has grown substantially: over 300% since 1980, and 175% since 1990. The proportion of manufacturing output by the USA (for the top 10 manufacturers) has declined from 33% in 1980, 32% in 1990, 35% in 2000 to 26% in 2010. If you exclude China, the USA was 36% of the manufacturing output of these 10 countries in 1980 and 36% in 2010. China’s share grew from 7.5% to 27% during that period.

The United Kingdom has seen manufacturing fall all the way to 10% of GDP, manufacturing little more than they did 15 years ago. Japan is the only other country growing manufacturing so slowly (but Japan has one of the highest proportion of GDP from manufacturing – at 20%). Japan manufactures very well actually, the costs are very high and so they have challenges but they have continued to manufacture quite a bit, even if they are not growing output much.

India’s manufacturing output as a percent of GDP bounces around a bit this is largely because they were such a small manufacturer (and the rapid and somewhat chaotic growth of their economy in general). India’s economy benefited greatly from information technology and call center jobs for economic growth. Very few other emerging economies have had alternatives to manufacturing to grow their economies quickly.

India still is manufacturing far below their potential for several reasons: poor infrastructure, incredibly poorly functioning bureaucracy standing in the way of manufacturing business opportunities and corruption. Without addressing these issues much more successfully it is hard for me to believe they will become a serious manufacturer (even with huge amounts of available labor and a very large domestic market).

India has been trying to grow their manufacturing output, and has done so in the last 10 years. I do think India can move ahead of England and France but, India’s manufacturing output could also easily be overtaken by Indonesia, Mexico, and others, if they don’t deal with their systemic weaknesses much more effectively.

Of the top 10 manufacturing countries, those with the largest manufacturing portions of their economies in 2010 were: China 32% and South Korea 27.5%. Globally, while manufacturing has grown, other areas of economic activity have been growing faster than manufacturing.

Related: The Relative Economic Position of the USA is Likely to Decline – Manufacturing Data, Accuracy Questions – Top 12 Manufacturing Countries in 2007 – Manufacturing Employment Data: 1979 to 2007 – USA Manufacturing Output Continues to Increase (over the long term)

Chart of manufacturing production by the top 10 manufacturing countries (2000 to 2010). The chart was created by the Curious Cat Economics Blog. You may use the chart with attribution. All data is shown in 2010 USD (United States Dollar).

In my last post I looked at the output of the top 10 manufacturing countries with a focus on 1980 to 2010. Here I take a closer look at the last 10 years.

In 2010, China took the lead as the world’s leading manufacturing country from the USA. In 1995 the USA was actually very close to losing the lead to Japan (though you wouldn’t think it looking at the recent data). I believe China will be different, I believe China is going to build on their lead. As I discussed in the last post the data doesn’t support any decline in Chinese manufacturing (or significant moves away from China toward other South-East Asian countries). Indonesia has grown quickly (and have the most manufacturing production, of those discussed), but their total manufacturing output is less than China grew by per year for the last 5 years.

The four largest countries are pretty solidly in their positions now: the order will likely be China, USA, Japan, Germany for 10 years (or longer): though I could always be surprised. In the last decade China relentlessly moved past the other 3, to move from 4th to 1st. Other than that though, those 3 only strengthened their position against their nearest competitors. Brazil, Korea or India would need to increase production quite rapidly to catch Germany sooner. After the first 4 though the situation is very fluid.

Taking a closure look at the large group of countries after top 4. Chart of manufacturing production from 2000-2010.

Chart of manufacturing production by the leading manufacturing countries (2000 to 2010). The top 4 countries are left off to look more closely at history of the next group. The chart was created by the Curious Cat Economics Blog based on UN data. You may use the chart with attribution.

Removing the top 4 to take a close look at the data on the other largest manufacturing countries we see that there are many countries bunched together. It is still hard to see, but if you look closely, you can make out that some countries are growing well, for example: Brazil, India and Indonesia. Other countries (most in Europe, as well as Mexico) did not fare well in the last decade.

The UK had a particularly bad decade, moving from first place in this group (5th in the world) to 5th in this group and likely to be passed by India in 2011. Europe has 4 countries in this list (if you exclude Russia) and they do not appear likely to do particularly well in the next decade, in my opinion. I would certainly expect Brazil, India, Korea and Indonesia to out produce Italy, France, UK and Spain in 2020. In 2010 the total was $976 billion by the European 4 to $961 billion by the non-European 4. In 2000 it was $718 billion for the European 4 to $343 billion (remember all the data is in 2010 USD).

Mexico is left of that comparison (and I would expect them to be below all the others in the comparison – but also substituting them for any of the 4 I would still believe those 4 countries would out-manufacture the European group. Also adding Russia to the Europe group and Mexico to the other group I would also expect the non-Europe group to manufacture more. I actually think Mexico has great potential but they did not have a particularly good decade and need to do a better job to realize their potential (being right next to the USA is a great advantage).

From 2000 to 2010 China grew manufacturing output by 298%. India was next at 232% and Brazil followed with 193%. The UK performed the worst, up just 2%, while Japan was up 5%. The USA was next worst up just 22% for the decade, which while still an increase. For decades there has been all sorts of talk about how the USA doesn’t manufacture anything anymore. This is just false. It is true that manufacturing jobs have been disappearing but this is a global phenomenon (even in countries growing manufacturing very quickly). It is also true the rest of the USA economy is growing faster than manufacturing output over the last few decades and so the percentage of manufacturing compared to the overall economy has shrunk (but this is due to higher growth elsewhere – manufacturing continues to increase). 2011 may actually have been quite a good year for manufacturing in the USA.

Related: Chart of Largest Petroleum Consuming Countries from 1980 to 2010 – USA, China and Japan Lead Manufacturing Output in 2008 – Manufacturing Employment Data: USA, Japan, Germany, UK… 1990-2009 – Top 15 Manufacturing Countries in 2009 –

The last few years I have had to estimate China’s manufacturing output (to separate out mining production), this year the data is provided using the same criteria for each country: manufacturing comprises units engaged in the physical or chemical transformation of materials, substances, or components into new products (see more detail). Economic data is never perfect and when you are comparing between countries it gets even more difficult (and the measurement discrepancies distort the data – compared to the state you are trying to measure). But still the data useful and interesting; understanding it includes some noise.

Chart of output by top 10 manufacturing countries from 1980 to 2010. The chart was created by the Curious Cat Economics Blog based on UN data. You may use the chart with attribution.

China has finally actually taken the lead as the largest manufacturer in the world. Reading many news sources and blogs you may have thought the USA lost the lead a couple of decades ago, but you would be wrong. In 1995 it looked like Japan was poised to take the lead in manufacturing production, but they have slumped since then (still they are solidly the 3rd biggest manufacturer). China has been growing manufacturing output enormously for 20 years, and they have now taken the lead from the USA.

As I have been saying for years the biggest economic story about manufacturing is the dramatic and long term increase of productive capacity in China. The next is the continuing global decline in manufacturing employment: increased productivity has seen production rise year after year and employment fall. What is the next most interesting stories is debatable: I would say the continuing failure to appreciate the continuing strong manufacturing production increases by the USA. Another candidate is the the decline in Japan. Another is the increase in several other counties: Korea, Brazil, India, Indonesia…

Looking more closely at some of the long term data shows how much China stands out. From 1980 to 2010 China increased output 1345%. The total top 10 group increased output 302% (all data is in current USD so inflation accounts for most of the gain, 100 1980-USD equal 280 2010-USD). From 1995 to 2010 China increased output 543%. The group increased 64%. For 1980-2010, the results for the other 3 largest manufacturing countries are: USA up 218%, Japan up 261% and Germany up 148% (other countries doing very well are Korea up 1893% and India up 737%). Looking at the last half of that period, from 1995-2010 the: USA up 44%, Japan down 11% and Germany up 19%.

One thing to remember about adjusting manufacturing data for inflation is that often the products created in later years are superior and cost less. So that a computer manufactured in 1990 which added $5,000 to the manufacturing total is far inferior to one in 2010 that added just $1,000. This point is mainly to say that while the increase in manufacturing in real (not inflated dollars) is not as high as it might seem the real value of manufacturing good did likely increase a great deal. But the economic data is based on price so manufacturing increases are reduced by cost decreases. Computers are the most obvious example, but it is also true with many other manufactured goods.

You can that the other largest manufacturing countries fail to keep up with the increases of the entire group of the top 10. China’s gains are just too large for others to match. If you remove China’s results (just to compare how the non-China countries are doing) from 1980-2010 the increase was 216% (so compared to the other 9 top manufacturers over this period the USA was even and Japan better than the average and Germany was worse). And from 1995-2010 the top 9 group (top 10, less China) increased just 28%: so the USA beat while Japan and Germany did worse than the other 9 as a group.

So you can see even with China growing manufacturing output enormously most other countries are also increasing manufacturing output (no matter how may articles talk about disappearing manufacturing in the USA and Europe), in constant dollars. The growth in output globally has been tremendous – largely driven by growing demand in China, India, Korea, Brazil, Mexico, Malaysia… in addition to growing demand in USA, Japan, Germany, UK, France, Italy… In the next 20 years more of the growth is likely to be in the first group listed in the previous sentence (as well as in Africa, if we are lucky – there are many good signs from Africa in the last 10 years).

Another interesting story, in the long term, is that Europe fell to just 5 of the top 10 countries this year and is likely to lose more. Brazil, Korea and India are not likely to be overtaken. Those three have the fastest growth rates since 1995 (other than China) and look to be in place to continue increasing capacity more than the others. On the verge of breaking through are: Russia, Mexico and Indonesia. Spain, recently replaced by India, doesn’t seem likely to get back into the top 10. France and the UK have the slowest growth rates for 1980-2010 and 1995-2010 (other than Japan from 1995-2010).

Several years ago you started to see stories about manufacturing moving from China to Vietnam or Thailand or some other countries for cheaper labor. I wondered about this so I looked at these countries and the total manufacturing output was lower than the amount China was increasing production by each year. Guess what, that is still true. In 2010 China increased output by $311 billion. Granted that was an enormous increase. So lets look at the average increase over the last 5 years, which is $196 billion.

A country with a total output of $196 billion would be in 12th place (Russia is at $209 billion – then you have $170-180 billion range, including Mexico, Indonesia and Spain). Total manufacturing production by several other countries: Thailand $113 billion, Malaysia $52 billion, Philippines $42 billion, Vietnam $20 billion (yes, barely over 10% of China’s yearly increase).

Can China increase output by $196 billion each year over the next 10 years, I very much doubt it. I would expect it to grow output, however. I also expect the USA to grow manufacturing output over the next 10 years. If I had to pick the top 10 manufacturing countries for 2020: China, USA, Japan, Germany, India, Brazil, Korea, Indonesia, Mexico, France. We will see how things turn out.

I will be adding a post tomorrow, looking more closely at the most recent period for the top manufacturing countries. And I will be posting more frequently on manufacturing data, and also economic data in general, in 2012.

Related: Countries with the Most Manufacturing Production from 1980 to 2009 – Manufacturing Output as a Percent of GDP by Country 1980 to 2008 – Manufacturing Data, Accuracy Questions – Manufacturing Jobs Data: USA and China (1990-2005)

In general I like high yielding stocks for retirement portfolios. Many are very good long term investments overall and I prefer to put a portion of the portfolio others would place in bonds in high yielding stocks. Unfortunately 401(k) [and 403(b)] retirement accounts often don’t offer an option to do this. Luckily IRAs give you the options to invest as you chose and by placing your IRA in a brokerage account you can use this strategy. In a limited investing option retirement account [such as a 401(k)] look for short term bond funds, inflation protected bonds and real estate funds – but you have to evaluate if those funds are good – high expenses will destroy the reasons to invest in bond funds.

There are actually quite a few attractive high yield stocks now. I would strive for a very large amount of diversity in high yield stocks that are meant to take a portion of the bonds place in a balanced portfolio. In the portion of the portfolio aimed at capital appreciation I think too much emphasis is placed on “risk” (more concentration is fine in my opinion – if you believe you have a good risk reward potential). But truthfully most people are better off being more diversified but those that really spend the time (it takes a lot of time and experience to invest well) can take on more risk.

A huge advantage of dividends stocks is they often increase the dividend over time. And this is one of the keys to evaluate when selected these stock investments. So you can buy a stock that pays a 4% yield today and 5 years down the road you might be getting 5.5% yield (based on increased dividend payouts and your original purchase price). Look for a track record of increasing dividends historically. And the likelihood of continuing to do so (this is obviously the tricky part). One good value to look at is the dividend payout rate (dividend/earnings). A relatively low payout (for the industry – using an industry benchmark is helpful given the different requirement for investing in the business by industry) gives you protection against downturns (as does the past history of increasing payouts). It also provides the potential for outsized increases in the future.

There are a number of stocks that look good in this category to me now. ONEOK Partners LP pays a dividend of 5.5% an extremely high rate. They historically have increased the dividend. They are a limited partnership which are a strange beast not quite a corporation and you really need to read up and understand the risks with such investments. ONEOK is involved in the transportation and storage of natural gas. I would limit the exposure of the portfolio to limited partnerships (master limited partnerships). They announced today that the are forecasting a 20% increase in 2012 earnings so the stock will likely go up (and the yield go down – it is up 3.4% in after hours trading).

Another stock I like in this are is Abbott, a very diversified company in the health care field. This stock yields 3.8% and has good potential to grow. That along with a 3.8% yield (much higher than bond yields, is very attractive).

My 12 stocks for 10 year portfolio holds a couple investments in this category: Intel, Pfizer and PetroChina. Intel yields 3.9% and has good growth prospects though it also has the risk of deteriorating margins. There margins have remains extremely high for a long time. Maybe it can continue but maybe not. Pfizer yeilds 4.6% today which is a very nice yield. At this time, I think I prefer Abbott but given the desire for more diversification in this portion of the portfolio both would be good holdings. Petro China yields 4% today.

When invested in a retirement portfolio prior to retirement I would probably just set up automatic reinvesting of the dividends. Once in retirement as income is needed then you can start talking the dividends as cash, to provide income to pay living expenses. I would certainly suggest more than 10 stocks for this portion of a portfolio and an investor needs to to educate themselves evaluate the risks and value of their investments or hire someone who they trust to do so.

Related: Retirement Savings Allocation for 2010 – S&P 500 Dividend Yield Tops Bond Yield: First Time Since 1958 – 10 Stocks for Income Investors

The chart showing manufacturing output by country was created by the Curious Cat Economics Blog based on UN data (in 2009 USA dollars). You may use the chart with attribution.

The large decline in Germany was 23%. This was a 18% decline in Euro terms, and when you added the decline of the Euro the total USA dollar decline was 23%. Quite extraordinary. Most European countries were down over 15%. In fact, so extraordinary it makes me question the data. World economic data is useful and interesting but it isn’t perfect. USA manufacturing declined just .5%. China increased manufacturing production by 9%.

The last 2 years, China has stopped separating out mining and utilities from manufacturing. The percentage of manufacturing (to manufacturing, mining and utilities) was 78% for 2005-2007 (I used 78% of the manufacturing, mining and utilities figure provided in the 2008 and 2009 data – but that could be wrong). The unadjusted 2009 China total was $2.05 trillion and for the USA the total manufacturing, mining and utilities was $2.33 trillion. In 2009, the manufacturing total was 76% of USA manufacturing, mining and utilities. The percentage varies significantly between countries (the Russian federation is about 55% and Japan about 91%) and various over time as a countries economy changes.

The big, long term story remains the same. China has continued to grow manufacturing output tremendously. I see very little data to support the stories about manufacturing having to leave China to go elsewhere (especially when you look at the “lower wages” counties mentioned in news stories – they are not growing at any significant rate). The USA is still manufacturing a huge amount and that production has steadily grown over time.

When you look back over the period from 1980 to today you can see

1. The biggest story is the growth in Chinese manufacturing
2. The USA started out the largest and has grown significantly
3. Japan did very well from 1980 to 1995, and since they have struggled
4. The USA, China, Japan are really far ahead of other countries in total manufacturing output, and Germany is solidly in 4th place.
5. After that the countries are fairly closely grouped together. Though there are significant trends hidden by the scale of this graph, which I will explore in future posts. South Korea has growth significantly over this period, for example.
6. The biggest macro trend that the data shows, but is not so visible in this chart (other than China’s growth), is the very strong performance of emerging markets (and in fact some counties have fully become manufacturing powerhouses during this period, most notably China but also, South Korea and Brazil). And I see that continuing going forward (though that is speculation).

Two more interesting pieces of data. Italy is the 5th largest manufacturing country, I don’t think many people would guess that. Since 1980 Italy surpassed the UK and France but China rocketed passed them. And Indonesia has moved into 14th place, edging out Canada in 2009.

I plan to take more time in 2011 to look at global manufacturing and other global economic data more closely and to write about it here.

Related: Data on the Largest Manufacturing Countries in 2008 – Top 12 Manufacturing Countries in 2007 – Top 10 Manufacturing Countries 2006 – Leading global manufacturers in 2004

The chart shows gross government debt as percentage GDP from 1990-2009. By Curious Cat Investing and Economics Blog, Creative Commons Attribution. Data source: IMF

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There are plenty of reasons to question this data but I think it gives a decent overall picture of where things stand. It may seem like government debt should be an easy figure to know but even just agreeing what would be the most reasonable figure for one country is very difficult, comparing between countries gets even more difficult and the political pressures to reduces how bad the data looks encourages countries to try and make the figures look as good as they can.

The poster child for irresponsible spending is Japan which has gross government debt of 218% of GDP (Japan’s 2009 figure is an IMF estimate). Greece is at 115%. Gross debt is not the only important figure. Government debt held within the country is much less damaging than debt held by those outside the country. Japan holds a large portion of its own debt. If foreigners own your debt then debt payments you make each year are paid outside your country and it is in essence a tax of a portion of your economic production that must be paid. If the debt is internal it mean taxpayers have to support bond holders each year (but at least when those bondholders spend the money it stays within your economy).

The USA debt stood at 64% in 1990, 71% in 1995, 55% in 2000, 61% in 2005, 71% in 2008 and 84% in 2009. Most rich countries saw significant increases in 2009 and will again in 2010. The IMF sees the USA going to 93% in 2010 and 103% in 2012. They see Germany at 75% in 2010 and 77% in 2012. They see the Greece increasing to 144% in 2012 and Japan to 239%.

Hong Kong has maintained gross government debt under 2% every year. Taiwan was 35% in 2005 and 40% in 2009, IMF estimates they will be at 37% in 2012. Singapore was 93% in 2005, 106% in 2009 with an estimate for 93% in 2012. Brazil had a 69% debt level in 2005, 69% in 2009 and the IMF has a 2012 estimate of 66%. Mexico had a 40% level in 2005, 45% in 2009 and is estimated to stay at 45% in 2012. Thailand, Turkey, Venezuela are under 50%; Malaysia and Argentina are under 60%. India was at 79% in 2005, 74% in 2009 and is estimated to be at 71% in 2012.

Related: Government Debt as Percentage of GDP 1990-2008 – USA, Japan, UK… – USA State Governments Have $1,000,000,000,000 in Unfunded Retirement Obligations – The USA Economy Needs to Reduce Personal and Government Debt – Oil Consumption by Country in 2007

Gross debt consists of all liabilities that require payment or payments of interest and/or principal by the debtor to the creditor at a date or dates in the future. This includes debt liabilities in the form of SDRs, currency and deposits, debt securities, loans, insurance, pensions and standardized guarantee schemes, and other accounts payable. Thus, all liabilities in the GFSM 2001 system are debt, except for equity and investment fund shares and financial derivatives and employee stock options. Debt can be valued at current market, nominal, or face values (GFSM 2001, paragraph 7.110).

Chart showing manufacturing output, as percent of GDP, by country was created by the Curious Cat Economics Blog based on UN data* (based on current USA dollars). You may use the chart with attribution.

For the 14 biggest manufacturing countries in 2008, the overall manufacturing GDP percentage was 23.7% of GDP in 1980 and dropped to 17% in 2008. I left India (15% in 1980, 15% in 2008), Mexico (20%, 18%), Canada (17%, 13%), Spain (25%, 14%) and Russia (21% in 1990 [it was part of USSR in 1980], 15%) off the chart.

Over the last few decades Korea, and to some extent China, are the only countries that have increased the percent of GDP from manufacturing. China has not only grown manufacturing activity tremendously but also other areas of the economy (construction, mining, information technology). The countries with the largest manufacturing portions of their economies in 2008 were: China 32%, South Korea 25%, Japan and Germany at 21%. The next highest is Mexico at 18% which declined slightly over the last 15 years (with NAFTA in place). Globally, while manufacturing has grown, other areas of economic activity have been growing faster than manufacturing.

The manufacturing share of the USA economy dropped from 21% in 1980 to 18% in 1990, 16% in 2000 and 13% in 2008. Still as previous posts show the USA manufacturing output has grown substantially: over 300% since 1980, and 175% since 1990. The proportion of manufacturing output by the USA (for the top 14 manufacturers) has declined from 31% in 1980, 28% in 1990, 32% in 2000 to 24% in 2008. The proportion of USA manufacturing has declined from 33% in 1980, 29% in 1990, 36% in 2000 to 30% in 2008. While manufacturing output has grown in the USA it has done so more slowly than the economy overall.

Related: The Relative Economic Position of the USA is Likely to Decline – Manufacturing Data, Accuracy Questions – Top 12 Manufacturing Countries in 2007 – Manufacturing Employment Data: 1979 to 2007 – USA Manufacturing Output Continues to Increase (over the long term)

* I made edits to the 1980 Brazil manufacturing data and 1980, 1985 and 2008 China manufacturing data because the UN data only showed manufacturing data combined with mining and utility data. And I am using older UN data that had manufacturing separated from mining and utility figures for China in the other years.

That last half of 2009 saw real estate delinquencies continue to increase. Residential real estate delinquencies increased 143 basis points to 10.14% and commercial real estate delinquencies in 98 basis points to 8.81%. Agricultural loan delinquencies also increased (112 basis points) though to just 3.24%. Consumer loan delinquencies decreased with credit card delinquencies down 18 basis points to 6.4% and other consumer loan delinquencies down 19 basis points to 3.49%.

Related: Loan Delinquency Rates Increased Dramatically in the 2nd Quarter – Bond Rates Remain Low, Little Change in Late 2009 – Government Debt as Percentage of GDP 1990-2008 – USA, Japan, Germany… - posts with charts showing economic data

Notes: these data are compiled from the quarterly Federal Financial Institutions Examination Council Consolidated Reports of Condition and Income. Charge-offs are the value of loans and leases removed from the books and charged against loss reserves. Charge-off rates are annualized, net of recoveries. Delinquent loans and leases are those past due thirty days or more and still accruing interest as well as those in nonaccrual status.

Charge-offs, which are the value of loans removed from the books and charged against loss reserves, are measured net of recoveries as a percentage of average loans and annualized. Delinquent loans are those past due thirty days or more and still accruing interest as well as those in nonaccrual status. They are measured as a percentage of end-of-period loans.

Chart showing the percentage output of top manufacturing countries from 1990-2008 by Curious Cat Management Blog, Creative Commons Attribution.

The first chart shows the USA’s share of the manufacturing output, of the countries that manufactured over $185 billion in 2008, at 28.1% in 1990, 27.7% in 1995, 32% in 2000, 28% in 2005, 28% in 2006, 26% in 2007 and 24% in 2008. China’s share has grown from 4% in 1990, 6% in 1995, 10% in 2000, 13% in 2005, 14% in 2006, 16% in 2007 to 18% in 2008. Japan’s share has fallen from 22% in 1990 to 14% in 2008. The USA has about 4.5% of the world population, China about 20%. See Curious Cat Investment blog post” Data on the Largest Manufacturing Countries in 2008.

Even with just this data, it is obvious the belief in a decades long steep decline in USA manufacturing is not in evidence. And, in fact the USA’s output has grown substantially over this period. It has just grown more slowly than that of China (as has every other country), and so while output in the USA has grown the percentage with China has shrunk. The percentage of manufacturing output by the USA (excluding output from China) was 29.3% in 1990 and 29.6% in 2008. The second chart shows manufacturing output over time.

Chart showing the output of the top manufacturing countries from 1990-2008 by Curious Cat Management Blog, Creative Commons Attribution.

The 2008 China data is not provided for manufacturing alone (the latest UN Data, for global manufacturing, in billions of current USA dollars). The percentage of manufacturing (to manufacturing, mining and utilities) was 78% for 2005-2007 (I used 78% of the manufacturing, mining and utilities figure provided in the 2008 data). There is a good chance this overstates China manufacturing output in 2008 (due to very high commodity prices in 2008).

Hopefully these charts provide some evidence of what is really going on with global manufacturing and counteracts the hype, to some extent. Global economic data is not perfect. These figures are an attempt to capture the economic reality in the world but they are not a perfect proxy. This data is shown in 2008 USA dollars which is good in the sense that it shows all countries in the same light and we can compare the 1995 USA figure to 2005 without worrying about inflation. However foreign exchange fluctuations over time can show a country, for example, having a decline in manufacturing output in some year when in fact the output increased (just the decline against the USA dollar that year results in the data showing a decrease – which is accurate when measured in terms of USA dollars).

If the dollar declines substantially between when the 2008 data was calculated and the 2009 data is calculated that will give result in the data showing a substantial increase in those countries that had a currency strengthen against the USA dollar. At this time the Chinese Renminbi has not strengthened while most other currencies have – the Chinese government is retaining a peg to a specific exchange rate.

Korea (1.8% in 1990, 3% in 2008), Mexico (1.7% to 2.6%) and India (1.4% to 2.5%) were the only countries to increase their percentage of manufacturing output (other than China, of course, which grew from 3.9% to 18.5%).

Related: posts on manufacturing – Global Manufacturing Data by Country (2007) – Global Manufacturing Employment Data – 1979 to 2007 – Top 10 Manufacturing Countries 2006 – Top 10 Manufacturing Countries 2005