The end of 2013 was a bit rough for the manufacturing industry. In October, the government shutdown left many manufacturers with unpaid or canceled orders. Harsh weather also made it difficult for manufacturers to get raw materials and ship finished products to distributors and retailers. Fortunately, it appears the manufacturing industry is experiencing a boost after several slow months of activity, which is good news for production workers, manufacturing managers, and other manufacturing employees.
One of the most important metrics in the manufacturing industry, the ISM index, increased to 53.2 in February. The index was at 51.3 in January, making this a rather significant increase. Analysts predict manufacturing output will increase when temperatures rise and companies don't have to close their doors due to heavy snowfall and icy road conditions. The manufacturing employment index remained unchanged, but hiring should pick up as soon as output increases. One key indicator—production—did decrease in February, but analysts attribute the decrease to poor weather conditions. Looking at the overall ISM index is an easy way to determine if the manufacturing industry is expanding or contracting; a number above 50 indicates expansion, while a number below 50 indicates contraction.
Economist Joel Naroff said he expects the manufacturing industry to recover after a difficult first quarter. Naroff predicts the recovery could be "huge" once manufacturers don't have to deal with harsh weather. The demand for commercial airplanes jumped considerably in February, which was a big boost to US manufacturing. Unlike the demand for seasonal items, the demand for commercial aircraft fluctuates from month to month, making it difficult for manufacturers to estimate production levels. The demand for steel and other primary metals also increased, keeping metal manufacturers busy.
US manufacturing will also benefit from the creation of two new manufacturing institutes. One institute will focus on digital manufacturing, while the other will focus on the production of lightweight metals. The federal government has partnered with educational institutions and private businesses to fund these institutes and encourage innovation. This could result in the creation of thousands of new manufacturing jobs within the next few years. The manufacturing institutes will also help the United States strengthen its manufacturing industry and become more competitive in the global market. China's manufacturing industry seems to be weakening after several years of rapid growth, which could be an opportunity for American manufacturing companies to attract new customers and increase production.
The manufacturing industry has faced many challenges in the past decade. The US lost thousands of jobs to outsourcing, but some of those jobs are coming back now that the federal government is working to create a nationwide manufacturing network. When the warmer weather sets in, it's likely production will increase and the ISM index will show more growth in the manufacturing industry.
(Photo courtesy of freedigitalphotos.net)
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