Daniel Ikenson of the Cato Institute reports that since the depth of the manufacturing recession in 2002, the sector as a whole has experienced robust and sustained output, revenue and profit growth. Despite all the stories about the erosion of U.S. manufacturing primacy, he says, the United States remains the world’s most prolific manufacturer—producing two and a half times more output than those vaunted Chinese factories in 2006.

Yet, policymakers point repeatedly to the loss of three million manufacturing jobs as evidence of impending doom, even though those acute losses occurred between 2000 and 2003. Job decline in manufacturing has since leveled off to historic averages, he says.

Calls for “protectionist” legislation are predicated on the belief that manufacturing is in decline and that the failure of U.S. trade policy to address unfair competition is to blame. But those premises are wrong, he argues. The totality of evidence points to a robust manufacturing sector that has thrived on account of greater international trade.

Calling recent data misleading, David Huether, chief economist of the National Association of Manufacturers, asserts that “while overall manufacturing activity was flat [in September], there’s an awful a lot of activity under the surface.”

The ongoing downturn in housing continues to affect some segments of manufacturing, such as wood products, furniture and textiles, he says, while disruptive strikes in the auto industry caused a short-term dip in motor vehicle production. 

“But outside of motor vehicles, manufacturing production rose a solid 0.3 percent in September, with gains taking place in primary and fabricated metals, computers and electronics, electrical equipment, aerospace, medical equipment and chemicals,” Huether says.

The fact that business equipment production rose at an annual rate of 7 percent in the third quarter, the fastest pace in a year, signals that business investments and capital goods exports are continuing to propel the economy forward.

“Overall, manufacturing production rose at a healthy 4.3 annual rate in the third quarter,” Huether says. “This is an encouraging sign for the economy and signals that despite the recession in housing, the expansion remains on track.”

The Institute for Supply Management’s September report on manufacturing showed that economic activity in the manufacturing sector expanded for the eighth consecutive month. “While some sectors of the economy are struggling, manufacturing growth continued in September,” though at a slightly slower rate, says Norbert J. Oie, ISM chairman. ISM’s Purchasing Manager’s Index registered 52.0 percent, down from 52.9 percent in August, but any reading above 50 percent indicates growth.

While ISM’s New Orders Index and Production Index also showed signs of slowing, the Employment Index increased slightly while the Inventories Index indicated significant inventory liquidation. With inventories low, any increase in demand in 2008 should trigger new production.

It’s a common perception that all American manufacturers are struggling today in the face of foreign competition, but record sales by many metals suppliers in the past two years would certainly suggest otherwise.