It's hard to blame productivity growth for a lot of manufacturing job losses.

Historically, in the U.S. and in other countries, periods of rapid productivity growth have been periods of strong employment growth.

The loss of manufacturing jobs after 2000 was just huge, and those jobs haven't come back.

While the short-term growth outlook is somewhat weaker, the underlying economic fundamentals remain strong. This is not the time to abandon fiscal discipline in favor of large tax cuts. Maintaining a fiscal surplus helps keep interest rates attractive for investment.

The underlying details of this report paint a stronger picture of the manufacturing sector, as evidenced by the robust growth rate of orders excluding transportation over the last three months.

Manufacturing is growing but the pace of growth has decelerated. The outlook for manufacturing production in 2006 is for moderate growth.