Full text of Pieces of Eight : Business : An Eighth District Perspective, Winter 1985-86

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Business
AN EIGHTH DISTRICT PERSPECTIVE
WINTER 1985-86

St. Louis Manufacturing Employment:
A Closer Look at Industrial Subsectors
T he sh ift in n a tio n a l em ploym ent away from
m anufacturing and toward services has been widely
publicized. A previous issue of Perspective established that
the Eighth District also has participated in these trends.1
Rather than a dramatic, recent phenomenon, however, the
analysis noted that manufacturing’s contribution to total
employment has declined steadily since the 1960’s in both
the nation and the region.
In this issue we return to the topic of manufacturing
employment and investigate trends in its composition in St.
Louis over the period of the 1982-85 economic recovery.2
Discussing manufacturing as a single entity ignores the very
different performance of the individual industries that make
up manufacturing and hides the fact that, while some U.S.
manufacturing industries have declined in recent years, many
others have grown. Even though the net effect of these
changes may have been a decline in the proportion of workers
in manufacturing, considering only the aggregate change
masks the myriad of factors that affects this sector of the
economy.

Manufacturing’s Declining Share of
Em ploym ent'
Since 1982, manufacturing’s share of total nonfarm
employment has fallen from 22.1 percent to 21.6 percent in
1985.3 Although this decline is small, it is a continuation
of a much longer trend. The chart on page 2 shows that manu­
facturing’s share of St. Louis employment has declined steadily
from 29.1 percent in 1972. A similar decline occurred
nationally with manufacturing accounting for 26 percent of
1 See Catherine Axtell Bieber, “Manufacturing vs. Services:
A Dramatic Shift in the District Economy?” Business: An
Eighth District Perspective, Federal Reserve Bank of St.
Louis (Spring 1985).
2 In this analysis we refer to the St. Louis Metropolitan
Statistical Area (MSA), which includes St. Louis City;
Franklin, Jefferson, St. Charles and St. Louis counties in
Missouri; and Clinton, Madison, Monroe and St. Clair
counties in Illinois.
3 All employment data exclude agricultural employment.
Employment data for 1985 are calculated based on the
10-month period ending in October 1985.




Table 1
St. Louis Employment Growth by Sector, 1982-85*
Total Nonagricultural Employment
Manufacturing
Nondurables
Food and Kindred Products
Textile Mill Products
Printing and Publishing
Chemicals and Allied Products
Durables
Primary Metal Products
Fabricated Metal Products
Machinery, except Electrical
Electronic Equipment
Transportation Equipment
Motor Vehicles and Equipment
Aircraft and Parts

2.3%
1.4
-0 .4
0.2
-3 .7
3.4
-0 .3
2.6
-4 .0
-1 .7
0.7
1.4
7.4
25.8
2.8

♦Compounded Annual average rates o f growth.

nonfarm employment in 1972, tailing to 20 percent by 1985.
The decline in m anufacturing’s share of St. Louis
employment between 1982 and 1985 resulted not from a
decline in the number of manufacturing workers, but from
a slower-than-average growth rate in this sector. The average
annual growth rates for employment in manufacturing and
its largest subsectors shown in table 1 indicate that total
manufacturing employment in St. Louis actually increased
during the recovery period at a 1.4 percent average annual
growth rate. This resulted in an increase in St. Louis
manufacturing employment from approximately 217,900 in
1982 to 277,400 in 1985. This growth, however, trailed the
2.3 percent average annual rate of growth of total nonfarm
employment.

Divergent Performance of Key
Manufacturing Subsectors
The slow increase exhibited by the
manufacturing sector as a whole has not been
shared by all of the manufacturing subsectors.
The transportation equipment subsector, for
example, has expanded at a 7.4 annual rate
since 1982. This industry dom inates

FEDERAL RESERVE BANK

WINTER 1985-86

M A N U F A C T U R IN G S H A R E O F T O T A L N O N F A R M
E M P L O Y M E N T : ST. L O U IS A N D U .S .
PERCENT

ANNUAL DATA

manufacturing in St. Louis, providing almost a quarter of
all manufacturing jobs in 1985. The 25.8 percent annual
growth rate of the motor vehicles and equipment industry,
a component of the transportation subsector, has been largely
responsible for the rapid increase in the transportation sector.
Growth in another transportation industry, aircraft and parts,
also has been strong, growing at a 2.8 percent rate.
Employment in subsectors producing electronic and
nonelectric machinery, however, has grown slowly, ex­
panding at rates of 1.4 percent and 0.7 percent, respectively.
Employment in the two rem aining m ajor durable
manufacturing sectors, primary and fabricated metals,
actually has declined at respective rates of 4 percent and
1.7 percent.
Of the major manufacturing subsectors producing
nondurables, the textile mill products and chemicals and
allied products industries have declined at respective annual
rates of 3.7 percent and 0.3 percent since 1982. In contrast,
the food and kindred products and printing and publishing
subsectors have increased at rates of 0.2 percent and 3.4
percent, respectively.

Conclusion
The ongoing decline in manufacturing employment as the

PERCENT

share of total employment often is misunderstood. As a
previous issue of Perspective explained, the shift of
employment from manufacturing to services is not a recent
phenomenon but has been continuing since the 1960s.
Moreover, rather than an inexorable uniform decline across
all manufacturing sectors, some subsectors have expanded
during the last three years, while others have contracted.
This diversity in performance suggests that any analysis of
trends in manufacturing employment is complex and not
likely to be traced to any single factor such as the strong
dollar and lower-priced imports.
Nationally, manufacturing industries in the United States
have exceeded the average rate of labor productivity growth
between 1975 and 1984.4 This faster-than-average growth
in productivity has allowed manufacturing’s share of total
national output to exhibit long-term stability despite a falling
share of employment. If similar productivity gains were
made by St. Louis manufacturers, the employment declines
observed in some sectors may not be indicative of a
contraction in output, but, rather, more efficient use of labor.
4Michael F. Bryan, “Is Manufacturing Disappearing?” Economic Commentary,
Federal Reserve Bank of Cleveland, July 15, 1985.

—Thomas B. Mandelbaum

Business—An Eighth District Perspective is a quarterly summary of business conditions in the area served by the Federal Reserve
Bank of St. Louis. Single subscriptions are available free of charge by writing: Research and Public Information Department,
Federal Reserve Bank of St. Louis, P.O. Box 442, St. Louis, Missouri 63166. Views expressed are not necessarily official
positions of the Federal Reserve System.
2



FEDERAL RESERVE BANK OF ST. LOUIS

WINTER 1985-86

E IG H T H D IS T R IC T B U S IN E S S D A T A
Growth Rates1
Current Period
General Business Indexes2

Year-to-Date 1985

1984

Aug-Oct

Arkansas
Kentucky
Missouri
Tennessee

1.0%
0.4
2.7
3.9

0.7%
2.2
2.6
2.2

3.2%
5.0
3.5
6.7

8.8%
5.5
16.2
6.7
8.4

7.6%
2.4
0.1
9.0
10.9

3.0%
1.8
0.3
-0 .6
4.0
2.3

4.4%
3.8
4.6
3.7
4.0
2.8
3.3
3.7
3.9
4.7

July-Sept

Retail Sales3

8.2%
4.1
6.9
-3 .3
13.3

United States
Arkansas
Kentucky
Missouri
Tennessee

Aug-Oct

Payroll Employment

2.8%
1.8
0.8
5.3
2.2
4.5
-0 .5
0.4
4.6
4.9

United States
D istrict
Arkansas
Little Rock
Kentucky
Louisville
Missouri
St. Louis
Tennessee
Mem phis

0.0
0.4
3.0
2.7

Aug-Oct

Average Hourly Earnings-Mfg.

0.6%
5.0
1.5
0.6
3.0
2.2
-0 .4
5.2
0.8

United States
Arkansas
Little Rock
Kentucky
Louisville
M issouri (June)
St. Louis (June)
Tennessee
Mem phis

2.9%
4.7
3.1
2.1
1.7
0.1
1.4
2.5
4.3

2nd quarter ’85

Personal Income

4.0%
1.0
-1 0 .8
2.8
2.9
3.2

United States
D istrict
Arkansas
Kentucky
Missouri
Tennessee

5.1%
3.0
0.2
1.4
4.1
4.3

Employment1
(current period Aug-Oct)
Year-to-Date 1985

Year-to-Date 1985

Same Period 1984

3.7%
2.6
-1 .7
3.5
3.6
5.5
6.1
6.2
5.7

1984
9.9%
10.7
12.2
11.2
10.2
10.1

Prices1
(current period Aug-Oct)
Year-to-Date 1985

Same Period 19

Key Industries
F a b rica te d M etal P ro d u cts
E le ctrica l and E le c tro n ic E q u ip m e n t
N o n e le c tric a l M a c h in e ry
T ra n s p o rta tio n E q u ip m e n t
Food and K in d re d P ro d u cts
T e x tile and A p p a re l
P rin tin g and P u b lish in g
C h e m ic a ls and A llie d P ro d u cts
C o n s tru c tio n




0 .4 %
-3 .5
-4 .8
-4 .2
0.9
-4 .8
-0 .8
-2 .2
5.3

-

1 4.8%
6.7
11.8
7.1
1.4
1.9
4.1
12.8
16.4

0 .8 %
1.2
1.8
1.5
-2 .8
0.1
5.2
0.8
1.1

3 .0 %
3.4
2.6
0.5
2.6
1.7
6.3
1.9
2.6

3

E IG H T H D IS T R IC T B U S IN E S S D A T A
Current
Period*12
3
U n e m p lo y m e n t R ate
U n ite d S ta te s
D is tric t
A rka n sa s
L ittle R o ck
K e n tu c k y
L o u isville
M isso u ri
St. Louis
T e n n e sse e
M e m p h is

C o n s tru c tio n C o n tra c ts 4
(m illio n s of d o lla rs )
D is tric t
A rka n sa s
K e n tu c k y
M isso u ri
T e n n e sse e

Previous
3 Months

Average Yearto-Date 1985

Average
1984

7 .3 %
7.7
8.1
6.2
8.5
8.0
6.7
7.9
8.0
6.4

7 .2 %
7.9
8.5
6.5
8.7
8.0
6.7
7.7
8.1
6.4

7 .5 %
8.4
8.9
7.1
9.5
8.6
7.2
8.1
8.5
7.2

$909.1
104.2
212.8
304.2
288.0

$8 7 1 .5
103.4
186.4
268.1
3 13.6

$ 830.4
115.7
167.5
251.4
295.7

A ug-O ct
7 .1 %
8.2
9.5
7.2
9.9
8.2
6.5
7.5
8.3
6.7

A ug-O ct
$939.7
118.3
203.3
274.5
343.5

NOTE: With the exception of construction contracts and employment and prices in key industries, all data are seasonally adjusted.
1Data are presented as three-month averages to minimize distortions due to the large variability of monthly data. The current period
growth rate is a comparison of the average of the current three months to the average of the previous three months. The year-to-date
growth rate is from the average of the three months ended in December 1984. All growth rates are compounded annual rates of change.
2Sources: Arkansas and Missouri from Southwestern Bell, Kentucky and Tennessee from South Central Bell.
3Sources: Arkansas from Southwestern Bell, Kentucky from Kentucky Revenue Department, and Missouri/Tennessee from U.S.
Department of Commerce.
4Source: F.W. Dodge, Construction Potentials, McGraw-Hill Information Systems Company, proprietary data provided by special permission.