The big exceptions to the American manufacturing jobs decline
A detailed snapshot of subsectors
The Trump Administration’s hope that its tariff policy would increase manufacturing jobs has failed to materialize.1 Even after a modest uptick in the last three months, the manufacturing sector lost 53,000 jobs in the year through June.2 It has now shed 300,000 jobs since its post-pandemic peak of 12.9 million in the second quarter of 2023.
But an EIG reader asked on X for a more-detailed breakdown of how specific subsectors within the manufacturing sector are doing, and because EIG is very much in the business of fan service, we are happy to oblige.
The short version of what we found is that nearly every manufacturing subsector has lost jobs since the post-COVID peak roughly three years ago.3 But we also discovered a few intriguing exceptions, and each of them tells a useful story about recent trends in the U.S. economy.
Start with Figure 1, which shows net job gains or losses in each subsector since the recent peak in 2023 through the end of 2025, the last available date for which data on subsectors is available.4 To get a sense of the most recent momentum for job growth in each subsector, the chart also shows how they did in 2025 alone.
Four manufacturing subsectors have enjoyed positive net job growth since the most recent peak for overall manufacturing employment. Two of them suffered reversals last year:
Food, beverage, and tobacco product manufacturing added an impressive 34,800 jobs on net since the peak. But that headline figure obscures a reversal last year, possibly reflecting Chinese retaliatory tariffs against American food products and immigration enforcement pressures on industries that rely heavily on migrant labor.
Petroleum and coal products manufacturing have eked out a tiny net job gain since the 2023 peak, then gave back ground in 2025, though the 2026 oil price spike may have since staved off that slide.
Jobs in two other subsectors — electrical components and transportation equipment — not only have grown since the peak but also have continued their growth throughout 2025. The rest of this piece will focus on them.
Figure 2 graphs these two subsectors against all other manufacturing subsectors. After jobs all across manufacturing bounced back following the pandemic, only these two sectors have enjoyed consistent and (for now) sustained growth since 2023.
As of the end of last year, electrical components manufacturing employed 9.1 percent more workers than in 2019, while transportation equipment employed 5.8 percent more.
Jobs in the rest of the American manufacturing sector, in contrast, were 2.9 percent below their pre-COVID employment level. The recovery and brief expansion of 2022 and 2023, when the sector climbed above pre-pandemic employment, proved short-lived.
What accounts for the resilience of these two subsectors? We can zoom in even closer to look at the specific industries within each subsector.5 We show the results in Figure 3.
Job growth in the transportation subsector is almost entirely driven by the boom in aerospace.6 In fact, aerospace leads all manufacturing industries in job growth since 2023. Last year it also posted the largest nominal trade surplus of any manufacturing industry, at $116.7 billion.
Driving the growth has been strong commercial and passenger airline demand, including a record-high order backlog. Boeing, the world’s leading airplane manufacturer, returned to profitability and high delivery volumes in 2025 after being plagued by safety scandals, worker strikes, and financial losses the prior year. Demand has also rippled downstream: Plane engine orders have surged, likely pushing engine makers such as GE Aerospace and Evendale to expand their workforces.
Aerospace’s continued growth reflects the United States maintaining its historical edge in high-tech, high value-added manufacturing.
The employment surge in the electrical components subsector tells a different story. It owes its strength to two industries: electrical equipment manufacturing; and batteries, wires, cables, and miscellaneous electrical components.7 8 These are among the industries that bore the brunt of the China Shock and suffered acute decline in the 2000s.9 Green energy and electric vehicles likely contributed to their initial recovery, raising demand for batteries and electrical infrastructure. But their continued growth even after the cancellation of EV subsidies in 2025 points to a different, potent, and entirely unsurprising driver: Artificial Intelligence.
AI’s manufacturing footprint runs the length of the supply chain. Dedicated data centers more than doubled their real consumption of electrical equipment and components from 2019 to 2024.10 Software firms building and deploying AI show an even larger rise, likely propelled by onsite infrastructure upgrades.11 Further downstream, data center buildup has lifted demand from engineering designers and construction contractors, while surging energy requirements have pushed governments to expand electricity generation and transmission.12
In Figure 4 below, we summarize the sources of demand (from other industries and sectors) for these two industries:
Rising AI-related demand has driven up prices, giving manufacturers a strong incentive to expand. The six industries and sectors in the figure above increased their real consumption of electrical components by 15.4 percent from 2019 to 2024, while nominal consumption rose 51.9 percent. That 36.5 percentage point gap far exceeds the roughly 20 percent broad inflation over the same period, pointing to price appreciation specific to these products.
Protectionists may interpret the new electrical manufacturing jobs as a tariff success, given the duties on copper wires and electrical grid equipment that remain in place. They would be mistaken. Imports of electrical equipment and components did not decline in 2025 relative to 2024, and metals tariffs have raised input costs for the very manufacturers supposedly being protected. Their growth owes to AI-driven demand, not trade policy.
The AI supply chain’s impact on manufacturing extends beyond electrical components. Architectural metals and cooling equipment rank among the fastest-growing manufacturing industries since 2023 and sustained gains through 2025, even as their broader subsectors contracted.13 14 15 The top five industries and sectors expanding real purchases of these products are all related to information technology, led by software companies and data centers, which collectively raised their demand for pipes and cooling systems by 8.9 percent in real terms from 2019 to 2024.
AI-led job creation in manufacturing complicates the popular narrative that data centers don’t create many jobs. A Corning-NVIDIA partnership is opening three fiber optic cable factories. Electrical and cooling equipment-makers are benefitting from Virginia’s data center buildup. GE Vernova received more electrical equipment orders from data centers in the first quarter of 2026 than in all of 2025. The spotlight falls on AI labs, chip designers, and computing hubs, but the AI ecosystem reaches the factory floor. Demand for energy infrastructure and climate control apparatuses represents an opportunity for significant industrial growth.
The post-COVID manufacturing boom is fading, and current policy is not arresting the decline. The rapid erosion of job gains in chips and autos is particularly concerning. Tariffs have proven insufficient to reverse the broad-based retreat in manufacturing employment, and the remaining steel and aluminum tariffs continue to impose a cost burden on manufacturers. Even in the industries that are expanding — aerospace and electrical components — the binding constraint is supply struggling to keep up with demand, whether measured by airplane order backlogs, defense production delays, or surging components prices.
A durable industrial renaissance will require cutting input and energy costs and lowering barriers to capital formation, whether the goal is sustaining leadership in aerospace, building out the AI-related manufacturing ecosystem, or stemming job losses elsewhere.
See our GitHub with replication code here.
The President’s 2025 Trade Policy Agenda, Office of the U.S. Trade Representative, March 2025, page 2: “Using trade policy to increase the number of manufacturing jobs in our country – and the share of manufacturing contributing to gross domestic product – will help raise wages and return our country to one with a more vibrant and secure middle class.”
Bureau of Labor Statistics, Current Employment Statistics, quarterly averages calculated from seasonally-adjusted monthly data.
The Bureau of Economic Analysis organizes NAICS industries into subsectors for its GDP, employment, and input-output tables, generally following the three-digit NAICS level. Exceptions include food and beverage (311) grouped with tobacco (312); textiles (313) grouped with textile product mills (314); and apparel (315) grouped with leather and allied products (316). Transportation equipment (336) is split into motor vehicles and parts (3361-3363) and other transportation equipment (3364 aerospace, 3365 rail, 3366 ships and boats, and 3369 other). The author further separates medical equipment (3391) from miscellaneous manufacturing (3399), as these industries differ substantially in character.
The jobs figures for the overall manufacturing sector come from the Bureau of Labor Statistics’ national Current Employment Statistics, or CES, and are updated monthly. The figures for the subsectors are from the Quarterly Census of Employment and Wages, or QCEW, and are only available through December 2025 as of publication. Hence all of the charts in this post use the QCEW.
Industry breakdowns here use four-digit NAICS codes, consistent with the BLS input-output tables referenced later in the article.
NAICS 3364
NAICS 3353
NAICS 3359
Caliendo, Dvorkin, and Parro (2019) found that computers, electronics, and electrical equipment (NAICS 334-335) absorbed a quarter of all manufacturing employment losses attributable to the China Shock, by far the hardest-hit industry group.
Data centers are represented by computing infrastructure providers, data processing, web hosting, and related services (NAICS 518)
Software companies are categorized as computer systems design and related services (NAICS 5415)
Engineering designers correspond to architectural, engineering, and related services (NAICS 5413), while construction includes the entire NAICS 23 sector. All federal government spending is aggregated together in the use table.
Architectural metals correspond to architectural and structural metals manufacturing (NAICS 3323)
Cooling equipment refers to ventilation, heating, air-conditioning, and commercial refrigeration equipment manufacturing (NAICS 3334)
Architectural and structural metals (NAICS 3323) belong to fabricated metal product manufacturing (NAICS 332), while ventilation, heating, air-conditioning, and commercial refrigeration equipment (NAICS 3334) falls under machinery manufacturing (NAICS 333).
Very interesting to see the breakdown by subsectors.
Re: data centers, the job creation is in the industries producing the materials required to build and equip them - not in the facilities themselves. Once the data centers are built, that's the end of the benefits with respect to employment.