The Federal Reserve recently reported that industrial output increased by 0.9% in January. Analysts were initially skeptical of the manufacturing industry and where it was headed, due largely in part to grim numbers. But the Federal Reserve has painted a different picture: the country’s manufacturing industry has grown by nearly a full percentage point, which is the first positive growth in half a year and the strongest growth since November 2014 (yes, it’s been that long).
“The economy is better than the markets think. We wouldn’t rule out another rate hike at the March meeting as financial market turbulence fades away and the economic outlook remains positive,” said Chris Rupkey, chief economist at MUFG Union Bank.
Granted, a 0.9% increase in output isn’t groundbreaking by any means, but it signals a step in the right direction for the U.S. manufacturing industry. As most analysts already know, this sector took a major hit last year, with both output and job growth shrinking. The Federal Reserve reported that industrial output had increased just once last year — and that was only 0.8% for the month of July. This slow growth, combined with a lower demand for industrial-made products, led to the industry’s decline. But things are turning back around in the manufacturing industry’s favor, as this recent report highlights positive growth.
So, why is the manufacturing industry doing so well now as opposed to just a few months ago? In 2015, the industry faced an uphill battle due largely in part to declines in mining and utilities. When January came, however, homeowners and business owners began using heat to warm their respective properties; thus, creating stronger demand for heating utilities.
To put these numbers into perspective, the U.S. manufacturing industry rose a total of 0.5% in January. How long will this growth last? That’s a question that analysts continue to debate, although current signals are pointing towards a healthier, stronger future for the U.S. manufacturing industry. With unemployment numbers continue to drop, and more manufacturing companies moving their operations from overseas back to the U.S., it’s safe to assume the market’s output will increase in the months to come.No tags for this post.