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Manufacturing Is Now Smallest Share of US Economy in 72 Years

The manufacturing sector currently makes up the smallest percentage of GDP since 1947.

Three years after Donald Trump campaigned for president pledging a factory renaissance, the opposite appears to be happening.

Manufacturing made up 11% of gross domestic product in the second quarter, the smallest share in data going back to 1947 and down from 11.1% in the prior period, a Commerce Department report showed Tuesday. Figures before 2005 were for full years only.

The latest number compares with 13.4% for real estate, 12.8% for professional and business services and 12.3% for governments, according to the figures on GDP by industry.

Once a powerhouse of the U.S. economy, making up about a quarter of GDP in the 1960s, the manufacturing sector has steadily declined in importance. Trump promised to deliver “victory” to factory workers by bringing production jobs back to the U.S.

While manufacturing has added about half a million workers on the whole since Trump took office, states like Pennsylvania and Wisconsin that helped him win in 2016 are now losing factory jobs amid a persistent trade war with China and a weaker global economy.

The administration’s protectionist policies have disturbed companies’ supply chains, stymied investment and slowed hiring. Tariffs on billions of dollars worth of Chinese products helped tip the manufacturing sector into recession earlier this year. Some recent figures suggest stabilization but it remains fragile.

Wednesday’s third-quarter GDP report is forecast to show the economy grew at the second-slowest pace of Trump’s presidency. On Friday, data may show manufacturing jobs dropped 55,000 in October from the prior month, largely reflecting the walkout of thousands of General Motors Co. employees.

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