According to a study by the Boston Consulting Group, there is good news ahead for the U.S. economy thanks to cheap natural gas prices. The study claims rising U.S. factory productivity, spurred by low natural gas prices, could help the country boost exports of manufactured goods and add as many as five million manufacturing and support jobs by the end of the decade.
Low natural gas prices, driven by the shale boom, will give the United States a cost advantage versus other industrialized countries says Boston Consulting. By 2015, this factor will make average manufacturing costs in the U.S. lower by 15 percent when compared to Germany and France, 8 percent lower than the U.K. and 21 percent lower than Japan. Boston Consulting says, however, that manufacturing costs will still remain 7 percent lower in China.
U.S. factory employment has already rebounded a bit from the low hit in 2010 with employment growing by 3.6 percent to about 12 million people currently. Boston Consulting expects this on-shoring trend (moving manufacturing back to the U.S.) to continue as the United States becomes a more competitive exporter thanks to the glut of natural gas leading to falling prices for the fuel. Already some major U.S. firms, such as General Electric and Caterpillar, have brought jobs back home.
The consultancy forecasts that the United States could boost its exports by about $90 billion by 2020 by winning orders currently being filled by competitors in Europe and Japan. U.S. exports last year, according to government statistics, totaled $1.48 trillion. Based on its export forecast and worker productivity figures, Boston Consulting Group projects that the U.S. will add between 2.5 million and 5 million jobs by decade's end which will aid in lowering the stubborn unemployment rate.
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