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Manufacturing & The Economy

U.S. GDP Grew 3.5% in Third Quarter

The gross domestic product (GDP) of the U.S. increased at an annual rate of 3.5% in the third quarter of 2014, according to the advance estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 4.6%.

The increase in GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, nonresidential fixed investment, federal government spending, and state and local government spending that were partly offset by a negative contribution from private inventory investment. Imports, which are a subtraction in the calculation of GDP, decreased.

The deceleration reflected a downturn in private inventory investment and decelerations in PCE, in nonresidential fixed investment, in exports, in state and local government spending, and in residential fixed investment that were partly offset by a downturn in imports and an upturn in federal government spending. 

Texas Manufacturing Activity Continues to Increase, Outlooks Improve

Texas factory activity increased again in October, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, fell from 17.6 to 13.7, indicating output grew but at a slightly slower pace than in September.

Other measures of current manufacturing activity also reflected continued growth in October. The new orders index rose notably from 7.5 to 14.2, reaching a six-month high. The capacity utilization index edged down to 18.1 and the shipments index slipped to 12.8, although still more than a quarter of firms noted increases in these measures over September levels.

Perceptions of broader business conditions remained optimistic this month and outlooks improved markedly. The general business activity index held steady at a solid reading of 10.5. The company outlook index surged more than 12 points to 18.2, reaching its highest level in six months. 

August Manufacturing Technology Orders Up Slightly

August U.S. manufacturing technology orders totaled $356.69 million according to The Association for Manufacturing Technology (AMT). This total was up 0.4% from July but down 6.0% when compared with the total of $379.26 million reported for August 2013. With a year-to-date total of $3,076.98 million, 2014 is down 2.4% compared with 2013.

“U.S. manufacturing activity remains at a brisk pace, and especially encouraging for manufacturing technology orders was a recent uptick in durable goods orders, particularly in aerospace, automotive, and several other key industries,” said AMT president Douglas K. Woods. “There has also been good news in factory employment as more manufacturers add workers to their payrolls.”

Industrial Manufacturing M&A Value Robust in 2014

Merger & acquisition (M&A) activity in the industrial manufacturing sector maintained a strong momentum in the third quarter. According to PwC, there have already been $102.7 billion in deal proceeds recorded for the year and 2014 to-date has already exceeded all annual totals of the last ten years.

There were 55 industrial manufacturing transactions (worth $50 million or more) in the third quarter, for a total deal value of $27 billion. That number of transactions is 13% lower than in the prior quarter but almost 30% higher than in the same quarter last year. 

NAM Monday Economic Report – October 27, 2014

What a difference a week makes. After a volatile week in financial markets amid worldwide economic worries, things calmed down last week. While the Dow Jones Industrial Average remains 2.7 percent below its all-time high on September 19, it gained 425 points last week, or 2.6percent. Attitudes shifted to a more positive stance on decent earnings reports and on news that firms remain mostly upbeat in their outlook. Of course, downside risks to the economy continue, including news of terrorism in Canada and still sluggish growth abroad. However, at least for now, cautious optimism is outweighing these concerns.


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