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Lehigh Valley Manufacturing Sector Breaks U.S. Top 50 in GDP

By Nicole Radzievich Mertz on December 14, 2021

Some Lehigh Valley manufacturers, including OraSure Technologies, expanded in 2020 to respond to the pandemic.

The COVID-19 pandemic of the last two years has brought tremendous economic and social change across the world, including a growth in manufacturing output in the Lehigh Valley that has launched the region into a Top 50 manufacturing market in the United States.

While Gross Domestic Product, or GDP, in the U.S. and the Lehigh Valley declined in 2020 due to a second quarter economic collapse, the Lehigh Valley’s manufacturing sector grew, new federal data shows.

Economic output by the Lehigh Valley’s diverse manufacturers reached $7.9 billion in 2020 as local companies produced food, drinks, medical supplies, and other essential items that sustained the nation during the pandemic.

The region’s manufacturing sector ranking is now 49th out of the 384 metro regions in the country.

Each year the U.S. Department of Commerce reports the country’s GDP and where it’s generated by region and economic sector. GDP is a measure of the total market value of goods and services produced in a year.

The Lehigh Valley metro region’s GDP in 2020 was $42.9 billion, down from an adjusted figure of $44.2 billion in 2019, largely a result of business restrictions aimed at stemming the spread of COVID-19, according to data released this month by the U.S. Bureau of Economic Analysis, the economic reporting arm of Department of Commerce.

“The Lehigh Valley economic output has been on a steady rise the last five years,” said Don Cunningham, president and CEO of the Lehigh Valley Economic Development Corp. (LVEDC) “While that is slightly down due to the pandemic, the region’s manufacturing sector delivered, becoming even more important during a time when the U.S. needed goods produced here.”

The Lehigh Valley’s GDP is larger than the GDP of three states: Alaska, Vermont and Wyoming. If the Lehigh Valley were a country its economy would rank 88th in the world, according to an analysis of 2020 GDP data compiled by the World Bank.

Manufacturing of non-durable goods, which include disposable items, was one of the areas of the Lehigh Valley’s economy that grew in GDP in 2020. Many of those goods are produced by companies in the food and beverage and life sciences sectors, two of the sectors LVEDC targets for attraction and expansion.

“The 2020 GDP data shows the resilience of the Lehigh Valley’s economy,” Cunningham said. “We began 2020 after posting a record high GDP for the Lehigh Valley and are weathering the worst economic crisis in a generation because of the balanced economy that has been growing here over the last decade.”

The 2020 GDP decrease was not unique to the Lehigh Valley. Of the 384 metro regions, 282 experienced decreases, as did Pennsylvania and the United States. The results for the metro region include Lehigh, Northampton, Carbon and Warren counties.

The Lehigh Valley remains the nation’s 65th largest economy of the nation’s 384 metro regions.

Despite the economic disruptions, Lehigh Valley’s four biggest sectors remain the same:  Finance, Insurance, and Real Estate ($8.1 billion); Manufacturing ($7.9 billion); Education and Health Care ($6.2 billion); and Professional and Business Services ($5.3 billion).

Finance, Education and Health Care, and Professional and Business Services each experienced a decrease in economic output compared to 2019. The largest decrease of any sector was in Arts, Entertainment, Recreation, Accommodation, and Food Services, down from $1.5 billion in 2019 to $1.1 billion in 2020. That sector bore the brunt of business restrictions imposed to limit the spread of COVID-19.

The U.S. Department of Commerce’s Bureau of Economic Analysis (BEA) adjusts its GDP figures annually to account for new information and projections. As a result, figures reported in 2019 or other previous years may have been changed or adjusted over time. The private sector output for 2019 was adjusted upward from $43.3 billion to $44.2 billion. Manufacturing output was first reported at $7.1 billion for 2019, but adjusted to $7.9 billion.

 

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