Manufacturing is powering a boost in the region’s economic output.
A recent report from a federal agency shows the economy of the Lehigh Valley pushing past $40 billion.
Data released on Tuesday by the U.S. Department of Commerce’s Bureau of Economic Analysis show the Lehigh Valley’s gross domestic product (GDP) for private sector industry has grown to $40.1 billion, a jump from last year’s record-high $39.1 billion for 2016, according to Lehigh Valley Economic Development Corp., which obtained and analyzed the figures.
The $40.1 billion regional GDP for 2017 is about a 5 percent increase over the previous year, and manufacturing was responsible for about 36 percent of that year-over-year growth, according to the federal agency.
Manufacturing growth should continue next year and the years to come, according to Don Cunningham, president and CEO of LVEDC.
“I can say that more than half of the prospects we have been working with have been manufacturers looking to work their way into the Lehigh Valley,” Cunningham said. “More than 18 percent of our economy is manufacturing and is growing. What we have been doing is a lot of work on manufacturing recruitment. We see tremendous demand for it. It’s really the fastest growing part of our economic output.”
The numbers are broken down by metropolitan statistical area, and aside from Lehigh and Northampton counties, Carbon County and Warren County, N.J., are in the mix.
The Lehigh Valley economy now ranks 64th out of the 382 largest metropolitan areas in the nation, ranking one spot higher than last year. LVEDC uses the term GDP to describe the region’s economic output.
The Lehigh Valley private sector GDP is larger than that of Wyoming ($34 billion) and Vermont ($27.4 billion), as well as 112 other countries in the world. If the Lehigh Valley were a country, it would be the 88th largest economy in the world in terms of economic output.
Manufacturing makes up $7.4 billion or 18.4 percent of the Lehigh Valley’s overall GDP, a figure that’s higher than its share of the national economy. Manufacturing is 11.6 percent of the U.S. economy, according to the federal agency.
LVEDC said manufacturing was also the fastest-growing sector for 2017 in terms of economic output. Its $7.4 billion GDP was an increase of $700 million (10.4 percent) compared to 2016. No other sector had a larger year-over-year percentage increase.
In the Lehigh Valley, manufacturing grew at a faster pace than transportation and warehousing, which saw the second largest year-over-year jump, according to LVEDC. That sector, with a $2.1 billion GDP, grew at a rate of 8.8 percent compared to 2016.
Cunningham said it’s a bit of a misnomer to view all the large buildings occupying space in the Lehigh Valley as warehouses and distribution centers. While some companies use these sites for that purpose, many companies also use these buildings to make products.
Food and beverage manufacturers have been growing, along with other sectors, he added.
LVEDC provided a breakdown of the total GDP by subsector, as well as the rate of year-over-year growth.
LVEDC deemed the following sectors as the top eight. Not all sectors in the report are listed here:
• Finance, insurance, and real estate: $7.6 billion (+4.26 percent, year-over-year)
• Manufacturing: $7.4 billion (+10.4 percent)
• Education, health care, and social assistance: $5.5 billion (+4.63 percent)
• Professional services: $5.2 billion (+2.52 percent)
• Retail: $2.4 billion (+1.4 percent)
• Information (including publishing and information technology): $1.9 billion (-3.73 percent)
• Transportation and warehousing: $2.1 billion (+8.8 percent)
• Arts, entertainment and accommodation: $1.7 billion (+1.7 percent)
George Lewis, LVEDC director of research and analysis, analyzed and presented the data. GDP rankings of other countries come from the World Bank.
2017 is the most recent year for which measurable GDP data is available. The $40.1 billion GDP figure does not account for government spending.