In November, the Institute for Supply Management manufacturing index was the highest it has been since April 2011. This is good news for the American manufacturing industry, especially in sectors hurt by the government shutdown that took place in October. The index surprised analysts, who initially predicted a drop from 56.4 in October to 55.2 in November. The employment sub-index for the manufacturing industry also increased to an eighteen-month high in November, giving industry professionals and investors a positive outlook for 2014.
On December 16, the Federal Reserve also released some manufacturing news that has industry insiders excited about the future. In October, the industrial production index was just 0.1 percent. This index, which is based on data for the utilities, mining, and manufacturing industries, increased to 1.1 percent in November. The manufacturing industry segment experienced an increase of 0.6 percent during the same month. One of the reasons manufacturing expanded so much in November is because of increased demand for goods. Manufacturers were able to keep up with this increased demand, keeping production levels high.
Several sectors of the manufacturing industry had increased output during November, with motor vehicle parts and production topping the list at an increase of 3.4 percent. Other sectors with increased output during the month include textiles, wood products, fabricated metal products, electrical equipment, chemicals, electrical appliances, petroleum products, furniture, nonmetallic mineral products, and coal products. Although much of the manufacturing news for November is positive, several sectors did experience a decline in production. They include computer and electronic products, primary metals, apparel and leather, and printing.
Analysts rely on several different pieces of data to make their predictions. The number of new orders placed is used to estimate future production, which is good news for manufacturing professionals. A measure of new orders showed an increase from 60.6 to 63.6 in November, which indicates production levels will remain high in the next few months. A surge of factory jobs were also available in November. This could result in a significant payroll increase, according to Amna Asaf, a member of the global economics staff at Capital Economics. Federal Reserve chairman Ben Bernanke just announced the Fed would be easing up on the bond-buying program introduced to stimulate economic growth following the recession. This could have an impact on the number of new orders and manufacturing jobs available in 2014 and beyond.
The significant growth of the manufacturing industry during November shows the industry has staying power. Several companies brought manufacturing activities back to the US, spurring growth and making people feel more confident about the future. Whether you manage a factory floor or work on a production line, you should be watching these indicators to see how the manufacturing industry is changing.
(Photo courtesy of freedigitalphotos.net)
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