After several years of struggling to recover from the recession, the manufacturing industry seems to be turning around. The November PMI exceeded analyst expectations, showing strong growth in the sector. A report from the Richmond Fed also indicates the manufacturing industry is growing in the central Atlantic region of the United States. This is great manufacturing news for those who work in the industry as well as those who rely on manufacturers to produce finished goods.
The Richmond Fed manufacturing index did not change from November to December but is much higher than it was during October. In October, manufacturers had to contend with a shutdown of the federal government, which resulted in canceled orders and delayed production activities for some companies. As a result, the Richmond Fed index for October was 1, which indicates very little growth in the industry. Fortunately, manufacturers rebounded quickly, pushing the index up to 13 for November. A number above zero indicates growth.
The Richmond Fed uses several subindexes to determine current business conditions for the manufacturing industry. In December, the employment index showed the most significant change, increasing from 6 to 14. Customers placed fewer orders in December, causing the new-orders index to decline from 15 to 10. The shipment index decreased slightly from 16 to 15. Based on these numbers, manufacturing experts expect the industry to improve during the first few months of 2014. The Richmond Fed index applies to businesses in Virginia, Maryland, South Carolina, North Carolina, parts of West Virginia, and Washington, D.C.
Other regions of the United States are also experiencing positive growth in the manufacturing industry. The Dallas-Fort Worth area is home to more than a dozen Fortune 500 companies including Kimberly-Clark, Texas Instruments, RadioShack, and Southwest Airlines. Several manufacturers have committed to opening new facilities in the area or expanding their current facilities, prompting people to flock to the region in search of manufacturing jobs. Analysts from Wells Fargo expect Texas to benefit from the increased number of residents in the form of better retail sales, more residential and commercial construction projects, and a tighter housing market. Florida is also experiencing a manufacturing boom, with one manufacturer committing to an $80 million expansion. This expansion will bring 100 new jobs to Florida by 2015.
Much of today's manufacturing news is positive, paving the way for additional growth in the industry. Several major companies have promised to move some of their production activities back to the United States, creating new manufacturing jobs and giving industry experts a more positive outlook. The Richmond Fed index is just the latest piece of good news for those concerned about the growth of the manufacturing industry. Watch for changes to this index and other manufacturing indicators to find out what to expect for 2014 and beyond.
(Photo courtesy of freedigitalphotos.net)
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