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Shrinking industrial output limits Rochester’s growth
Shrinking industrial output limits Rochester’s growth
New data from the U.S. Bureau of Economic Analysis provide another reminder of the difficult recovery that local residents and businesses have faced since the Great Recession.
Adjusted for inflation, the total value of goods and services produced in the Rochester metropolitan area declined by 0.2 percent in 2016—the third time in the past six years that real GDP has contracted on an annual basis (Figure 1).
Real goods and services output remains 4.1 percent below the 2006 pre-recession peak, contrasting starkly with the 14 percent average gain recorded by the 100 most populous U.S. metro areas.
The major drag on Rochester’s economy in 2016 was a familiar one—shrinking industrial output.
Measured in constant 2016 dollars, real manufacturing GDP fell by $231 million or 3 percent. On a per capita basis, this translates to a 2.8 percent decline—nearly six times the -0.5 percent average loss for the top 100 metro areas (Figure 2).
Since 2006, Rochester’s real manufacturing output has fallen by a breathtaking 44.9 percent, shaving $6.4 billion from topline goods and services GDP.
While data on specific industry subsectors is not available, downsizing at Eastman Kodak Co. likely accounts for the bulk of the reduction.
Still, while industrial headwinds are diminishing, they have not completely abated. Lower factory output appears to have dragged on the broader Rochester economy last year.
Real per capita GDP from non-manufacturing industries expanded by just 0.6 percent—roughly half the 1.2 percent average gain for the top 100 metros and only one-third the 1.8 percent increase in neighboring Buffalo.
If Rochester’s economy is to accelerate in 2017 and 2018, gains in global manufacturing demand will be an important variable to watch.
Gary Keith is vice president and regional economist at M&T Bank Corp.
(c) 2017 Rochester Business Journal. To obtain permission to reprint this article, call 585-363-7269 or email [email protected].
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