June was a great month for U.S. manufacturing, with the industry reporting strong growth amidst concerns by investors. According to a report published by the Institute for Supply Management, the country’s manufacturing index increased from 51.3 in May to a whopping 53.2 in June (note: any index above 50 indicates positive growth). This means June was the fourth consecutive month in which the U.S. manufacturing industry grew, attesting to its strength and resilience.
This report is certainly good news for the thousands of people who are employed in the manufacturing industry. When the U.S. dollar increases towards the beginning of last year, the manufacturing industry subsequently took a hit, which in turn hurt oil production and global economies. This resulted in the U.S. manufacturing index to remain below 50 from October of last year through February of this year, signaling a downwards spiral for this otherwise important market. But like all markets and industries, what goes up must come down — and what goes down must, well, go back up.
Fast forward to March and the U.S. manufacturing industry saw positive growth, with an index just slightly above 50. Manufacturing companies reported more orders while their factories adapted to the ever-changing landscape. This wasn’t just a random act, either. The country’s manufacturing industry experienced positive growth the following month in April, as well as May and now June. 13 of 18 manufacturing industries reported positive growth in June, including the highly significant metals and textiles industries.
Financial analysts were quick to point out that the ISM’s manufacturing report came at a delicate time, when Britain voted to leave the European Union in favor of creating its own trade deals. According to a separate report released by the ISM, 38% of manufacturers believe this decision will have a negative impact on their operations. Of course, it’s still too early to say how exactly Britain’s decision to leave the European Union will affect manufacturers. But this report indicates that at least some manufacturers are concerned with the implications of this monumental trade change.
“Today’s report is clearly a positive development and suggests that the long-suffering manufacturing sector may finally be starting to recover,” said Andrew Hunter of Capital Economics.
Do you think the U.S. manufacturing industry is headed in the right direction?
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