ANALYSIS:IN JANUARY 1921, US manufacturers were first obliged to tell statisticians in Washington how many widgets they made each month. They have been filling out the same forms and mailing them to the capital's number crunchers ever since. No other country has a consistent and reliable data series on industrial activity going back so far.

The miraculous 25-fold increase in US industry’s output over that period is shown in Chart 1. The relentless upward trend is also to be seen in equivalent, more recently compiled Irish figures and in those of other developed economies since the middle of the last century.

These decades-long trends give the lie to myths that we in the West don’t make things anymore and that manufacturing has been “offshored” to developing countries as the process of globalisation has gathered pace.

Patterns of production across the developed world during the recession have also mirrored those of the US. Manufacturers, who had been trimming output throughout 2008, axed it after the onset of crisis. They continued to slash month after month until mid-2009.

Patterns of Irish industrial activity have been very different. There was no discernible downward trend prior to September 2008; the decline thereafter was much more gradual; and the bottom was reached only at the end of 2009, by which time most economies were six months into recovery.

More positively, however, the rebound in 2010 in Ireland has been unusually strong, with industrial output in the first quarter of the year surpassing any other three-month period since the series was first compiled back in 1980.

Irish industrial output is volatile compared to other countries, as is clear from Chart 2. This is because of the massively productive pharmaceuticals industry, which now accounts for more output than all other industrial sector combined.

Because there is a relatively small number of players involved, the production schedules of individual companies influence the aggregate data. This raises questions about whether the recent boom in the sector is real or simply the chance bunching of production by a handful of companies. As most of the increase in overall output is accounted for by the recent boom in pharma, any fallback later in the year could make the manufacturing revival look like a false dawn.

A bigger question relates to the scale of the benefits to the wider economy flowing from the pharma sector. While there is no doubt that the gains are big, they are unlikely to be as significant as the eyebrow-raising output figures would suggest.

This may reflect a wider phenomenon. In many countries the recession has seen a decoupling of measures of output on the one hand and employment on the other (these are normally quite tightly correlated, with the latter lagging the former by about half a year). The latest numbers show that, despite the resilience of industrial output, the total number of people employed in industry (excluding construction) fell by 14 per cent in the two years to the first quarter of 2010. This is a far larger decline than the average in peer economies.

Some year-old employment numbers included in yesterday’s CSO release show that the numbers at work in the pharma and chemicals sector declined despite an increase in production.

A more normal relationship between output and employment measures has been in evidence in the computer sector. And both have been heading south fast.

The hardware side of the IT industry in Ireland has halved in absolute terms from its peak just two years ago. Output is now back to the levels of a decade ago and it accounts for less than one-10th of total manufacturing.

Much of this is the result of the decline in global demand – output patterns in the industry reflect international trends. But there is also a structural aspect. As productivity gains have not been sufficient to maintain competitiveness vis-a-vis lower wage economies, PC manufacturers are heading east. In this industry at least, the phenomenon of offshoring lives up to the hype.