WASHINGTON — The Coalition for a Prosperous America (CPA) today released an update to the Domestic Market Share Index (DMSI), a new indicator that measures the success of U.S. manufacturing producers in the U.S. home market. The DMSI increased slightly to 66.5 in Q3 2022, an increase of 0.3 percentage points from the previous quarter. The DMSI measures the share that U.S. domestic producers hold of the U.S. market for manufactured goods. A DMSI of 66.5 means that foreign producers (imports) hold just over one third of the U.S. market for manufactured goods. The U.S. market for manufactured goods, worth over $7 trillion a year, is the world’s largest market.
The slight increase in Q3 comes after Q2 2022 matched a historic low of 66.2% for the DMSI. In Q3, durable goods increased by 0.4 percentage points to 58.1% while nondurable goods increased 0.4 points to 76.4%. Domestic shares continue to be affected by the supply chain disruptions which have impacted domestic production of goods including motor vehicles and imports from countries affected by Covid lockdowns, shipping delays, and other snafus.
Among sectors, furniture manufacturers grew domestic market share the most in Q3 by 4.6 percentage points to 60.2%. Also among manufacturing sectors with large gains were producers of wood products with an increase of 4 percentage points and chemical manufacturers with an increase of 2.1 percentage points.
Producers of apparel lost 1.3 percentage points of market share and fell to a two-year low of 7.7% domestic market share, the lowest among 19 manufacturing sectors. Motor vehicle producers gained 0.7 points to reach 68.3% in Q3.
Despite the slight quarterly increase, 2022 DMSI remains below the previous year’s level of 66.6 in 2021. As Figure 1 shows, the DMSI has steadily declined over the past two decades. Since 2002, U.S. manufacturers have decreased from 77.3% of market share to a nearly 11-percentage point decrease of 66.5% in Q3 2022. Compared to a year ago, 13 of the 19 manufacturing sectors have lost market share.
By import source, China increased by half a percentage point to 7.3% of the U.S. domestic market share in Q3. China continues to rank first among the largest source of U.S. manufacturing imports, accounting for about 20% of the foreign-sourced market share. In Q3, China grew its market share most among apparel products by 3.9 percentage points and miscellaneous manufactured goods by 5.8 percentage points.
“Although the 2022 third quarter DMSI shows a slight increase, the data show a clear medium-term downward trend for American manufacturers’ share of the domestic market,” said CPA Chief Economist Jeff Ferry. “While Congress and the Biden administration were successful in passing policies that will boost domestic production like the Corporate Alternative Minimum Tax and the solar domestic production tax credit, the overvalued dollar and low overall tariffs are powerful factors inhibiting domestic production growth and supporting a strong reliance on imports. The U.S. domestic market is the largest, most important market in the world, which is why the right place to begin a pro-growth, pro-jobs policy is in our domestic market, and put the DMSI on an upward trajectory.”
Figure 1: U.S. Producers Share of Domestic Manufacturing Market