U.S. Manufacturing Sector Is the Little Engine That Could

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Manufacturing

Source: U.S. National Archives

Manufacturing conditions in the United States continued to improve in December, according to indexes maintained by the Institute for Supply Management and Markit Economics. Both indexes, which measure the health of the manufacturing industry in similar ways, closed 2013 near 12-month highs.

Each purchasing managers’ index is determined by conducting a survey of industry executives; a reading above 50 indicates growth. The ISM Manufacturing Report on Business showed a 0.3 percentage point decline in its headline PMU, from 57.3 to 57, indicating slightly slower growth in December than in November. The index was weighed down by inventories, which actually contracted in December, and exports, which slowed down but still showed growth. Importantly, though, new orders increased, indicating ongoing healthy demand for manufacturing goods.

A purchasing and supply executive said in the ISM report, “Amazingly enough, we are seeing meaningful increases in our sales in nearly all segments and regions.” Another added that markets are sound: “We typically see a seasonal 4th quarter slowdown. However, this year … not so.” Another comment indicates that reduced government spending has been a headwind for the transportation industry, but overall, executives appear to agree that conditions are both good and improving.

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