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Manufacturing Driving Regional Growth as Lehigh Valley GDP Reaches Record-High $40.1 Billion

By Colin McEvoy on September 18, 2018

The Lehigh Valley’s gross domestic product has reached a record-high $40.1 billion, and nearly every economic sector saw year-over-year growth.

The Lehigh Valley’s gross domestic product has reached a record-high $40.1 billion, and nearly every economic sector saw year-over-year growth.

The Lehigh Valley’s gross domestic product has reached a record-high $40.1 billion, with much of the economic growth driven by the region’s thriving manufacturing sector, according to newly-released federal data.

The $40.1 billion regional GDP for 2017 is about a 5 percent increase over the previous year, and growth in manufacturing was responsible for about 36 percent of that year-over-year growth, according to the U.S. Department of Commerce’s Bureau of Economic Analysis (BEA).

“The Lehigh Valley is unique among major metropolitan areas in the United States in that manufacturing is driving such a large percentage of its growth,” said Don Cunningham, President & CEO of the Lehigh Valley Economic Development Corporation (LVEDC). “Manufacturing is clearly alive and well in the Lehigh Valley, and our regional GDP is the largest it’s ever been, far surpassing even the days of Bethlehem Steel.”

Manufacturing the fastest-growing sector

Manufacturing makes up $7.4 billion – or 18.4 percent – of the Lehigh Valley’s overall $40.1 billion GDP. That’s a much higher percentage than its share of the national economy. Manufacturing is 11.6 percent of the U.S. economy, according to the BEA.

Manufacturing was also the fastest-growing economic 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.

That means manufacturing in the Lehigh Valley grew at a faster pace than transportation and warehousing, which saw the second-largest year-over-year jump. That sector, with a $2.1 billion GDP, grew at a rate of 8.8 percent compared to 2016.

“Contrary to the misnomer that big box warehousing and fulfillment centers are driving growth in the Lehigh Valley economy, manufacturing far surpasses it in economic output and growth,” Cunningham said. “That’s a testament to both the strength of manufacturing in the Lehigh Valley, and the balanced and diversified makeup of the overall economy.”

Manufacturing remains the Lehigh Valley’s second-largest sector. The largest is finance, insurance and real estate, which makes up $7.6 billion of the regional economy. Manufacturing fell only $200 million behind it in 2017, compared to a gap of $900 million the previous year.

Lehigh Valley ranks 64th in the U.S.

Gross domestic product is a measurement of a region’s economic output. The Lehigh Valley’s $40.1 billion figure accounts for private sector industry and does not include government spending. If that were included, the figure would rise to $43.8 billion.

The Lehigh Valley economy now ranks 64th out of the 382 largest metropolitan areas in the United States, which is one spot higher than last year. The BEA released the new data on Sept. 18, and 2017 is the most recent year for which measurable GDP data is available.

“The Lehigh Valley is the nation’s 69th largest major metropolitan area by population but the country’s 64th largest economy, so we continue to swing well above our weight class in economic output,’ Cunningham said.

The Lehigh Valley private sector GDP remains larger than that of Vermont ($27.4 billion) and Wyoming ($34 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.

Economic growth across many sectors

Nearly each of the economic sectors of the Lehigh Valley economy saw year-over-year GDP growth in 2017, with the exception of the information sector, which saw a slight drop from $2 billion to $1.9 billion. The sector-by-sector breakdown can be found below:

  • Finance, Insurance and Real Estate ($7.6 billion, +4.26% year-over-year)
  • Manufacturing ($7.4 billion, +10.4%)
  • Education, Health Care and Social Assistance ($5.5 billion, +4.63%)
  • Professional Services ($5.2 billion, +2.52%)
  • Retail ($2.4 billion, +1.4%)
  • Transportation and Warehousing ($2.1 billion, 8.8%)
  • Information ($1.9 billion, -3.73%)
  • Arts, Entertainment, Accommodation ($1.7 billion, +1.7 percent)

These GDP figures derive from the BEA and were analyzed and presented by George Lewis, LVEDC Director of Research and Analysis. GDP rankings of other countries come from the World Bank. The BEA adjusts its figures to account for new information and projections, so numbers that have been reported for previous years may have been changed or adjusted over time.

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