October was a good month for the United States manufacturing industry. According to recent reports, the industry experienced positive output for the second month in October, signaling growth after a short but noticeable period of stagnant activity.
Earlier this week, the Federal Reserve released its report on the U.S. manufacturing industry, revealing that factory production had climbed 0.2% for the second consecutive month. Why is this important? Well, factory production accounts for roughly 75% of all output from the manufacturing industry. Of course, the 0.2% growth is still less than the Bloomberg survey forecast, which predicted a growth of 0.3%. Nonetheless, it’s positive growth — and that’s welcome news among all manufacturing companies and professionals.
There are several factors contributing to the manufacturing industry’s strong growth, one of which is the stabilization of household spending. Consumers have more disposable income, allowing them to buy more products. This, of course, creates a stronger demand for manufactured products, assisting the industry in its growth. Analysts, however, say that stronger export markets and greater investments in domestic businesses are needed to really assist the manufacturing industry in growing. Unless these changes are made, analysts say the industry won’t experience any significant gains.
When speaking about the new report highlighting the U.S. manufacturing industry, senior economist David Sloan explained that people were “worried” about the potential stalling of the industry. In the end, however, it experienced strong growth, with the manufacturing industry “getting better slowly.”
“The energy sector is stabilizing, and that takes away a negative,” said senior economist David Sloan. “People were worried that manufacturing is stalling out but it did get some modest growth. The outlook for manufacturing is getting better slowly.”
The Institute for Supply Management (ISM) increased the manufacturing index for October to 51.9, which is up from the 51.5 in the prior month. New orders had declined, but measured of factory production and employment increased. This growth offset the lack of new orders, signaling growth for the manufacturing industry.
We’ve talked about this before on our blog, but it’s worth mentioning again that manufacturing consist of nearly 12% of the entire U.S. economy. It plays an important role in our nation’s economy, keeping cash flowing while creating tens of thousands of new jobs in the process.
Do you think the U.S. manufacturing industry is headed in the right direction?