As a manufacturing specialist, you know that the production industry ties into every other economic sector. Consequently, when one section of the economy takes a nosedive—as it did in 2007—manufacturing companies take a direct hit. On the other hand, the manufacturing industry often provides the first indications of market recuperation as new orders increase and clients return. Recently, the Federal Reserve Bank of Philadelphia released a report containing several encouraging signs that manufacturing companies are recovering.
Most US manufacturing companies saw relatively little growth—if any—during the four-year period immediately after the housing market collapsed in late 2007. In fact, many previously stable firms found themselves in highly compromised positions by a lack of new customers and the unwillingness of existing clients to invest. Consequently, some production businesses cut staff, scaled down their operations, and put off expansion.
According to the Philly Fed report, which was released in October 2013, the manufacturing industry on the East Coast is gaining momentum. Overall, manufacturing companies in the survey region—which included eastern Pennsylvania, Delaware, and southern New Jersey—saw a 19.8 percent growth in September 2013. August's figures were even better: a 22.3 percent rise in sector activity. Pundits and financial analysts had expected 15 percent industry growth over the same time period.
An encouraging 36 percent of responding manufacturing companies in the area reported growth, while only 16 percent reported decreased activity. Drilling down into the results, businesses described a six-point increase in new orders: the resulting 27.5 figure gave the industry its highest index reading in more than two years. The strong performance came as a surprise to many in the sector, a number of whom felt dismayed at the government shutdown and subsequent lack of corresponding official reports.
Other East-Coast-based reports gave less optimistic results in October. An earlier analysis by New York's Federal Reserve Bank showed stalled manufacturing jobs development in the state over the same number of weeks. In combination, however, both reports paint a heartening picture: after all, growth is happening as manufacturing jobs gradually return to prerecession levels. Experts in both Philadelphia and New York agree that 2014 will likely bring a nationwide manufacturing boom.
The worst may be over, but the recession's effects are far from gone. The recent government shutdown certainly slowed progress in several vital areas; it also prevented the release of governmental growth reports and left insiders and manufacturing companies reliant on industry-generated survey results. While frustrating, economic setbacks are a common part of market recuperation. Because of the dramatic and global nature of the recent Great Recession, production business owners can anticipate a slower-than-average recovery. Nevertheless, recovery is happening.
(Photos courtesy of Freedigitalphotos.net)
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