Manufacturing commanded the largest part of the Lehigh Valley’s economy in 2021, pushing the metro region’s Gross Domestic Product to a record $47 billion, according to new data released by the U.S. Bureau of Economic Analysis.

With an economic output of $8.4 billion, manufacturing has now overtaken finance, insurance and real estate as the Lehigh Valley’s top contributor to the GDP. Manufacturing made up 18% of the Lehigh Valley’s private sector output compared to 12% in the nation as a whole last year.

The GDP of the Lehigh Valley’s top four sectors were still within about $2.5 billion of each other, indicating a balanced and vibrant economy.

“It seems that each year a new chapter is written on the economic renaissance of the Lehigh Valley,” said Don Cunningham, President & CEO of Lehigh Valley Economic Development Corporation (LVEDC). “2021 was another record-setting year with the region’s GDP increasing by almost $5 billion and manufacturing taking the top spot as the Lehigh Valley’s largest economic sector.”

The private sector economic output has recovered from the adjusted figure of $42.5 billion during the first year of the COVID-19 pandemic in 2020. After factoring in inflation, the GDP rose by 6.4% from 2020 to 2021.

GDP measures total market value of the goods and services produced in a region over a year. LVEDC tracks the GDP across the Lehigh Valley’s metro region. The metro region comprises Lehigh, Northampton, Carbon and Warren counties. Lehigh and Northampton County make up $40.6 billion of the metro region’s $47 billion private sector output.

The Lehigh Valley’s private sector output is the 65^th largest in the nation and is bigger than the states of Alaska, Vermont and Wyoming.

If the Lehigh Valley were a country, its economy would be the 88^th largest in the world.

Following manufacturing, the largest sectors in the Lehigh Valley’s GDP:

• Finance, insurance and real estate ($8.1 billion)
• Educational services, health care and social assistance ($6.9 billion)
• Professional and business services ($5.9 billion)
• Wholesale trade ($3.7 billion)
• Information ($3 billion)
• Retail trade ($3 billion)
• Transportation and warehousing ($2.7 billion)

One sector that had yet to recover from the pandemic was arts, entertainment, recreation, accommodation, and food services. Among the hardest during the pandemic-induced downturn, that sector produced an output of $1.8 billion last year.

The Lehigh Valley’s output has been steadily rising over the last five years, even when accounting for the drop during the pandemic. The Lehigh Valley’s private sector output has increased at a compound annual rate of 1.4% over the last five years. Several key economic sectors saw outsized growth: manufacturing rose at a rate of 3.6% and professional, scientific and technical services by 5.1%.

Those sectors include companies in industries the LVEDC is recruiting: advanced manufacturing, life sciences, food and beverage production, and high-value business services.

In 2021, the Lehigh Valley welcomed expansions from companies in those sectors. B. Braun Medical, which has its U.S. headquarters in the Lehigh Valley, was building a 310,000 square foot expansion. Personal products maker A.P. Deauville moved into the Lehigh Valley, and Victaulic opened a 400,000-square-foot expansion.

“We could have put that anywhere around the United States, but we decided on the Lehigh Valley,” Victaulic CEO Rick Bucher said at the recent LVEDC Fall Signature Event.

Amount the reasons, Bucher said, was because it could build upon the success the company has had in the region and draw from the talent from a region known for its strong work ethic.

Crayola CEO Rich Wuerthele recently said his iconic company saw increased demand during the pandemic and hired 100 people within a year to keep up with it.

“We were able to secure 100 new people into our factory and stabilize our manufacturing far faster than our peers across the country that are still chasing talent,” Wuerthele said.

The Lehigh Valley’s manufacturing economy is among the top 15% of the U.S. metro regions ranked in 2021. The Lehigh Valley in 2021 ranked among the top 50 markets for the production of food, medical supplies and other non-durable goods.

There are 36,000 people employed in manufacturing in Lehigh and Northampton counties, according to Chmura Economics JobsEQ.