It was only a matter of time, but it looks like the United States manufacturing industry is regaining the ground it had recently lost. For the first time in roughly three months, U.S.-based manufacturing facilities produced more steel, computers, automobiles, etc. This isn’t a trend that will likely be going away anytime soon, either, as analysts predict the manufacturing industry to continue to grow in the months and years to come.
The Federal Reserve confirmed that manufacturing had increased 0.4% in October, which is in stark contrast to September during which it fell 0.1%. So, what does this mean for the U.S. manufacturing industry? There are a few key points to takeaway from this report, one of which is that retailers and wholesalers are no longer stockpiling products. Over the past year, many retailers and wholesalers had been producing and/or ordering a surplus of product, which subsequently hurt their output. With a stockpile of product, there’s less demand for production. Furthermore, the strong U.S. dollar cut into experts by increasing the price of U.S.-made goods that are sold overseas.
But financial analysts are warning that the ramifications from a strong dollar will likely continue, especially if the Feds decide to hike the interest rates. There’s been some talk about a potential interest rate hike for months now. As of yet, however, the Feds have been reluctant to raise interest rates. But when they do decide to increase interest rates, it will likely make the dollar a more valuable currency to investors; thus, increasing its worth.
On the plus side, consumer spending in the U.S. is strong, which is believed to have helped offset some of the pitfalls. The auto industry, for instance, experienced a whopping 14% sales increases in October. Assuming these numbers continue, the auto industry could have a record-breaking year.
As you probably know by know, the holiday season is right around the corner, which means consumers are out in full force, purchasing holiday gifts for their friends and family. With holiday spending comes a strong economy. All of these factors are contributing to a rebound of the U.S. manufacturing industry.