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Manufacturing & The Economy

Index Shows Economic Growth Accelerated in November

The Chicago Fed’s National Activity Index’s three-month moving average, CFNAI-MA3, rose to +0.48 in November from +0.09 in October, reaching its highest level since May 2010. November’s CFNAI-MA3 suggests that growth in national economic activity was above its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests modest inflationary pressure from economic activity over the coming year.

Industrial production increased 1.3% in November after moving up 0.1% in October, and manufacturing production increased 1.1% in November after moving up 0.4% in the previous month. In addition, manufacturing capacity utilization rose to 78.4% in November from 77.6% in October.

Markit: U.S. Manufacturing Growth at 11-Month Low

U.S. manufacturing output and new orders continued to rise at a solid pace in December, but both rates of expansion eased to the weakest for 11 months. The latest survey also highlighted a moderation in job creation and input buying growth across the manufacturing sector. Meanwhile, goods producers benefitted from a slowdown in cost inflation to its lowest since April 2013, reflecting falling commodity prices and oil-related costs.

Adjusted for seasonal influences, the Markit Flash U.S. Manufacturing PMI registered 53.7 in December, down from 54.8 in November and the lowest reading for 11 months. Nonetheless, the index was comfortably above the neutral 50.0 value and remained higher than the long-run series average (52.1).

Manufacturing payroll numbers increased for the 18th consecutive month in December. Meanwhile, manufacturing input cost inflation moderated for the third month running and was the lowest since April 2013.

ASQ: More Manufacturers Upbeat About 2015 Revenue Growth

Manufacturers are increasingly positive as 2014 ends, with 83% expecting revenue growth next year, up from 64% of manufacturers who anticipated growth in 2014, according to results of the ASQ 2015 Manufacturing Outlook Survey. Results found that 75% of manufacturers experienced revenue growth in 2014, up from 65% in 2013.

Manufacturers still face challenges however, with 41% citing the economy as their greatest hurdle, followed by the shortage of skilled workers, at 26%, according to the survey. Other hurdles identified by respondents include, “competition,” “falling crude oil prices,” “managing growth,” and “raw materials shortages.”

“Driven by gains in 2014, it’s encouraging to see manufacturers’ positive outlook in revenue growth for 2015,” said ASQ CEO William Troy.

Law Signed to Create National Manufacturing Strategy

The omnibus spending bill just passed by Congress included a bipartisan bill from Sens. Chris Coons (D-DE) and Mark Kirk (R-IL) to create a national manufacturing strategy. The American Manufacturing Competitiveness Act would require the development of a national manufacturing strategy and requires the administration to analyze every four years factors that have an impact on manufacturing competitiveness.

The omnibus spending bill also included bipartisan manufacturing legislation to expand a national network of manufacturing innovation institutes. The hubs, modeled on the eight that the Obama Administration has announced thus far, will bring together businesses, universities and local public officials to conduct research, job training and manufacturing all under the same roof.

NAM Monday Economic Report – December 15, 2014

The biggest domestic economic news story last week was actually a global one: The price of petroleum continued to plummet. Since peaking at $107.95 per barrel on June 20, the price of West Texas Intermediate crude has fallen dramatically, down to $57.49 a barrel on Friday. There are a number of factors at play here, including increased North American energy production, excess supply worldwide, a stronger U.S. dollar and a slowing global economy. It is this latter point that has spooked financial markets, on fear that the weakened global demand for petroleum might be a harbinger of larger challenges. Indeed, as discussed in the most recent Global Manufacturing Economic Update, North America’s economy appears to be a bright spot in an otherwise sluggish international economic climate.

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