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Here’s some advice for Reuters reporters Allison Lampert and Rajesh Kumar Singh, and their editors Kevin Krolicki and Bill Berkrot: If you’re going to produce a story showing that labor shortages are decimating output in a certain part of the economy, make sure they really are decimating output in a certain part of the economy. Because in the case of the U.S. aircraft parts sector on which their piece this morning focuses, it ain’t.

How do we know this? First of all, it’s true that “In the United States, aerospace employment” is below its “pre-pandemic level” (though by my calculations, the Labor Department data show the fall-off has been 7.66 percent from immediately pre-pandemic-y February, 2020 through last July) and not 8.4 percent, as the article contends). And that’s indeed much worse than the record compiled in manufacturing overall – which is up 0.52 percent during that period.

Further, the workforces in aircraft engines and engine parts are down even more sharply – by 8.94 percent and 14.88 percent, respectively.

But output “grounded,” as the headline claims? Not exactly. In fact, according to the Federal Reserve’s manufacturing production figures, output in the broad aerospace products and parts category has surged by 28.44 percent between February, 2020 and last month. In the narrower aircraft and parts grouping, the growth has been 30.60 percent.

And these numbers are inflation adjusted, meaning that they’re not being artificially boosted by price increases. They represent the volume of stuff being turned out. And they leave in the dust the results for manufacturing overall (up 3.69 percent in real terms since just before the CCP Virus arrived in force).

Even more striking, the output rebound in aerospace has remained strong recently. In that broad category, it’s jumped 10.38 percent year-on-year in August. For aircraft and parts, the surge has been an even faster 30.60 percent.

How can this be? The answer should be obvious to anyone who knows even a smidgeon of economics. These industries have become much more efficient. And indeed, official figures show that labor productivity in aerospace products and parts soared by 15.50 percent between 2020 and 2021 (the latest figures available). The comparable figure for all manufacturing? Just 3.30 percent. (As known by RealityChek regulars, the government also tracks a broader measure of productivity, called total factor productivity, but the detailed industry figures aren’t out yet.)

And here’s what’s totally weird: Steps taken by companies in aircraft parts to compensate for scarce workers, and plans to take more, were reported in the Reuters piece.

There’s no doubt that businesses in manufacturing overall and in aerospace in particular would love to have more workers – largely because demand for their products is exceptionally strong. But as the output and productivity data reveal, they’re figuring out how to solve this problem – and impressively.

That’s not only not a bad news story – it’s a great news story. And if other industries (including in the service sector) could remotely duplicate this performance, responding to labor shortages by making technological and other forms of progress, rather than by pleading for more mass immigration and other productivity-killing crutches, the entire economy and its prospects would be in much better shape than at present.

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