If currencies at least partly determine where things get made, the continued rise in the US dollar is bad news for manufacturers in the US. It is especially bad news given that rise is particularly sharp against the Chinese renminbi since the mainland has become the workshop of the world after 2001 when China joined the World Trade Organisation. Manufacturing accounts for less than 12 per cent of GDP and 8.6 per cent of employment in the US. But those two data points do not capture the true importance of manufacturing to the US economy. In addition, Manufacturing has an impact on the services sector, which is where the bulk of jobs in the US are concentrated. “Manufacturing matters more than its size suggests,” says Bruce Kasman, chief economist of JPMorgan in New York. “And it also has a signalling effect; it picks up things first.” Moreover, manufacturing “plays an outsize role in the financial markets. It accounts for 60 per cent of the profits of companies in the S&P 500,” as Ruchir Sharma of Morgan Stanley Investment Management notes. So it matters that American manufacturing is still far from robust. New orders in the December Markit PMI were virtually stagnant while the ISM manufacturing report came in below 50 for the second month in a row — something which has not happened since 2009. Moreover, there is good reason to believe that manufacturers are likely to come under intensifying pressure. That will have ripple effects on both the economy and financial markets — few of them good.