Will Washington try to fix the manufacturing crisis?

Only six months ago, there were widespread predictions that a manufacturing revival would fuel the U.S. recovery. “Manufacturing appears to be red hot,” proclaimed Ryan Sweet, an economist for Moody’s Analytics. “The big surprise of this recovery is how strong and how robust the manufacturing sector has been,” agreed Kurt Karl, Swiss Re’s head of economic research in New York. But new data from the Federal Reserve are dashing those hopes and showing just how weak the sector remains.

Manufacturing output rose just 0.5 percent in August — a 3.8 percent increase over the previous August, but a sign of weakness overall. The output of consumer goods was even weaker, at 0.2 percent, partly helped by a 1.7 percent increase in output from the auto industry. New regional forecasts from the New York Fed and Philadelphia Fed were even more sobering. Business conditions for New York manufacturers worsened for the fourth consecutive month — with lower demand and fewer employees — and in Philadelphia for the three consecutive months. Here’s a snapshot of Philadelphia’s manufacturing slump:

(FEDERAL RESERVE OF PHILADELPHIA)

There are other recent signs of the manufacturing fallout as well. The nation’s jobless benefits claims are still on the rise. And of the six states with the most jobless claims last week, five cite manufacturing layoffs as one of the driving factors.

At the same time, manufacturers have complained that Washington has failed to prioritize a manufacturing recovery in both its short- or long- term plans for the economy. The one industry that did receive major government help — the auto industry — has fared better this summer than most other sectors, aided as well by Japan’s post-earthquake recovery. But President Obama didn’t single out manufacturers for a special help in his jobs plan, and stimulus money funding innovations in the industry has since expired.

When Obama appointed Ron Bloom to be country’s first “manufacturing czar” in 2009, there was some hope that the United States would develop a long-term plan to transform the ailing industry. But Bloom mainly focused on the auto bailout, and he has left the administration. As of now, he has not been replaced.