A new year, an old DUH. Manufacturing is an American Must! The sector grew in January, and is likely to drive economic growth in the first quarter of 2013.
AND all five of the PMI’s component indexes: new orders, production, employment, supplier deliveries and inventories registered above 50 percent in January.
The U.S. economy contracted at a 0.1% annualized rate in the last three months of 2012, surely the effect of concerns that businesses held over large tax hikes and federal spending cuts. Strength of consumer spending and business investment suggests that the economy will grow. Kathy Bostjancic, director for macroeconomic analysis at the Conference Board says, “While the inventory runoff and the steep decline in defense spending in the fourth quarter made economic activity look weaker than it really was, the underlying demand from consumers and businesses kept moving forward at a moderate pace.” An article from the Wall Street Journal, Recovery Shows a Soft Spot, expands upon that notion; “U.S. companies stepped up investment in equipment and software during the quarter, with business investment rising at a rate of 8.4%, the strongest pace in a year. That defied expectations that companies would pull back due to worries over the ‘fiscal cliff’ budget dispute in Washington.” A Reuters article, GDP unexpectedly shrinks, decline seen temporary accounts for the vigor of consumer spending, “A second report, from payroll processor ADP, showed private-sector payrolls expanded by 192,000 jobs in January after increasing 185,000 in December, which also suggested the recovery’s fundamentals were sound.”
Although the GDP dropped in the fourth quarter of 2012, due to a sharp cut in government spending, businesses’ lack of stocking shelves and decline in exports, as well as the devastation of Superstorm Sandy, forecasters didn’t perceive the decline as a gloomy indicator. On the contrary, they predicted that the U.S. economy would expand at around a 2% pace in this quarter.
Financial data firm Markit’s industry survey found the U.S. Manufacturing Purchasing Managers Index rose to 55.8 last month, the best showing since April. Chief economist at Markit, Chris Williamson called it “a good start to 2013″ and said the survey “suggests the underlying health of the industrial sector continues to improve and rising production will help the economy return to growth in the first quarter, providing there are no set-backs in coming months.” Williamson also sights another factor that will conceivably lend to a potent growth in the first quarter; a robust demand from China and Germany in January.
Despite favorable expectations, there is still a “wait and see” attitude among the panel. “Fiscal cliff, uncertainty in general and EU economic weakness are factors causing our customers to be very tentative with commitments for product purchases in 2013,” noted one Machinery respondent. And a Fabricated Metal Products panelist commented, “Still waiting for reaction to consumer tax increases.”
Chris Williamson validates the manufacturing sector’s involvement in economic conditions, “In all, the survey points to the U.S. industrial sector acting as a key driver of the global economic upturn that has been evident in recent months and suggests that any fears of a double-dip recession in the U.S. are overplayed.”
Mr. Williamson we hope you are right about a recession and we know you’re right about manufacturing being a vital operative in economic growth.
Therese Yacenda is the Social Media Manager at Accelerated Buy Sell, Inc. and Manufacturing Web Solutions as well as a contributing author to the blog. She orchestrates the social media landscape for the “Accelerated Group of Companies” that provides tools and services to help manufacturers grow and exit strategies to maximize dollars when they are ready to retire or sell their manufacturing business. Accelerated’s group of companies that provide services to the manufacturing industry includes:
www.AcceleratedBuySell.com – Provides Online Industrial Auction Services, Used Equipment Auctions, Capital Equipment Auctions, Plant Liquidations, Industrial Plant Cleanout Services, Used Machinery Location Services, Certified Machine Tool and Equipment Appraisals, and more.
www.AcceleratedMfgBrokers.com – Specializes in Manufacturing Business Brokerage and Mergers and Acquisitions. We help manufacturers develop exit strategies to maximize retirement dollars, and successful manufacturers expand through acquisition of other manufacturing companies, product lines and customer lists. Manufacturing Companies for sale throughout the United States are listed on this site.
www.AcceleratedRE.com – Provides Industrial Real Estate Brokerage Services, Online Real Estate Auctions, Sealed Bid Real Estate Auctions and complete industrial facility cleanout services.
www.IgniteMfg.com – Provides funding for products made in the USA, and engineering/manufacturing educational needs through Crowd Funding.
www.MfgWebSolutions.com – Provides web development and social media services for manufacturers at under-market rates.
Therese Yacenda is a contributing author to:
blog.AcceleratedBuySell.com - A site that provides the latest manufacturing news, statistics and opinion. It also provides information on how to grow a manufacturing business, and what to do if you are a manufacturing company that needs to close.
MFGWebSolutions.com/blog - Provides the latest information on social media and web development for manufacturers. It gives manufacturers tips and tricks for boosting their web presence.