After a difficult winter, US manufacturing may be gaining strength. A recent report from the Institute for Supply Management (ISM) brought positive news of increased orders and higher manufacturing activity.
At the beginning of April, the ISM released its monthly manufacturing report, which includes data from US manufacturing companies in the month of March. The report, titled "March 2014 ISM Manufacturing Report on Business," indicates that the manufacturing industry may be bouncing back after a slow winter season.
According to the ISM report, the manufacturing index for March rose to 53.7, which is a 0.5 percent increase from February's rating. Any rating above 50 indicates that the industry is growing. Since the beginning of the year, US manufacturing companies have reported steady—if slow—growth. Despite a dramatic slowdown in December of 2013, March 2014 was the 10th consecutive month of growth in the industry.
New orders and production both rose in March. The Production Index of 55.9 was particularly strong, with an increase of 7.7 percent from February. In fact, it was the most significant month-over-month boost since June of 2009. Growth in the New Orders Index was not as dramatic, but the increase of 0.6 to 55.1 indicates that more companies are ordering new products as spring gets into full swing. Exports and imports also grew in March.
The ISM tracks 18 different manufacturing industries each month. Of those sectors, 14 experienced growth in March. Four sectors—wood products, apparel, electrical equipment and miscellaneous manufacturing—contracted during the same period.
Despite the overall growth in US manufacturing, employment numbers failed to pick up in March, much to the disappointment of industry professionals. According to the Bureau of Labor Statistics (BLS), manufacturing employment in March did not change at all. The one-month BLS diffusion index for March sat at 50, which indicates that the number of lost jobs and added jobs was roughly equivalent. Compared to February's diffusion index rating of 51.9, the March numbers were disappointing for job seekers.
The growth in the manufacturing industry comes as a welcome respite after one of the toughest winters in recent history. Sub-zero temperatures swept the nation, leading to a drop in new orders in many locations and halting production in others. As the colder parts of the country begin to thaw, however, US manufacturing is poised for recovery.
In comparison to global manufacturing markets, the United States is performing well. In Europe, manufacturing numbers were essentially unchanged in March. In the United Kingdom, the industry continued an 8-month streak of poor performance.
Although US manufacturing has been growing slowly in past months, it continues to be competitive on a global scale. As temperatures rise, the construction industry picks up and the economy as a whole continues to grow, manufacturing is expected to increase.
(Photo courtesy of Stoonn / freedigitalphotos.net)
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