U.S. Economic Development Leaders Report Increase in Manufacturing Prospect Activity

September 17, 2013

Results of the latest bi-annual survey of 181 economic developers by Avalanche Consulting conducted in July show that the leading industry for announced projects and jobs in communities of all sizes was Manufacturing, illustrative of the continued national recovery of manufacturing jobs. The next most common project announcements were in Health Care Services, Education Services, and Mining / Extraction.

These trends are consistent with recent job growth numbers from the Bureau of Labor Statistics, which show some of the highest industry job growth from 2011 to 2012 in Mining / Extraction (5.1% growth), Professional Services (3.4%), Education & Health Services (1.9%), and Manufacturing (1.7%). Manufacturing in particular has seen a remarkable turn around, creating jobs from 2010 to 2012 after declining continuously the previous decade.

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The distribution of prospect activity by city size also appears consistent with national trends. In micro communities (those with less than 100,000 residents), Manufacturing and Mining / Extraction were the clear industry leaders. Micro communities tend to be located closer to natural resources, such as shale oil fields, and therefore are often the preferred location for Mining / Extraction activities. They also often remain competitive locations for extraction-related and other manufacturing operations that require proximity to customers and lower-cost real estate and workforce.

In small communities (those with 100,000 up to 249,999 residents), the most announcements on average were in Health Care Services and Education Services. Small communities often serve as sub-regional centers for health care and education, servicing surrounding micro and rural communities, and thus have witnessed increased activity in these sectors.

Medium-sized communities (those with 250,000 up to 999,999 residents), saw the most announcements on average in Manufacturing, R&D, Distribution / Warehousing, and IT / Software. Medium-sized communities include many university towns, reflecting a higher share of R&D activity. Medium-sized communities also tend to offer greater affordability to smaller companies than large cities, attracting a greater share of IT / Software, Manufacturing, and Warehouse / Distribution activity.

Large communities (those with 1 million+ residents), saw the most announcements on average in Mining / Extraction, Manufacturing, and Professional Services. Large cities continue to be major destinations for Professional Services, Manufacturing, and Mining / Extraction (generally offices and engineering as opposed to physical extraction as in micro communities). This reflects the major workforce, distribution, and infrastructure strengths of larger cities.

Overall, the most recent Economic Development Activity Index appears to show strong and diverse industry growth in communities of all sizes. The correlation between reported prospect activity and recent national employment numbers reinforces the validity of both measures and tells a positive story for US industrial growth: Manufacturing truly seems to be on the rebound across communities, with additional growth in Mining / Extraction, Education & Healthcare Services, Professional Services, and IT / Software.