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Manufacturing & The Economy

NAM Monday Economic Report – October 20, 2014

Here is the summary for this week’s Monday Economic Report:

Global financial markets were highly volatile last week, with investors concerned about slower growth in Europe and an Ebola outbreak in the United States, among other factors. Indeed, industrial production in the Eurozone fell 1.8 percent in August, and activity was down largely across-the-board, most notably in Germany (down 4.3 percent), the Eurozone’s largest economy. Sluggish income and labor market growth in Europe has also pushed inflationary pressures lower, with year-over-year pricing changes of just 0.3 percent in September. Despite such worries, equity markets began to rebound on Friday, with the Dow Jones Industrial Average (DJIA) closing at 16380.41. Nonetheless, the DJIA remains 5.2 percent below its all-time high of 17279.74 on September 19.

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Fed Reports Growth, Improving Conditions

Reports from the twelve Federal Reserve Districts generally described modest to moderate economic growth at a pace similar to that noted in the previous Beige Book, with several Districts noting that contacts were generally optimistic about future activity.

Manufacturing activity increased in most Districts since the previous Beige Book. However, New York noted that manufacturing growth had stalled, and Boston indicated that their contacts cited weaker results than in the past few reports. The outlook for manufacturing was positive in a number of Districts.

Industrial Production Up After August Decline

Industrial production increased 1.0% in September and advanced at an annual rate of 3.2% in the third quarter of 2014, roughly its average quarterly increase since the end of 2010. In September, manufacturing output moved up 0.5%, while the indexes for mining and for utilities climbed 1.8% and 3.9%, respectively. For the third quarter as a whole, manufacturing production rose at an annual rate of 3.5% and mining output increased at an annual rate of 8.7%. The output of utilities fell at an annual rate of 8.5% for a second consecutive quarterly decline. At 105.1% of its 2007 average, total industrial production in September was 4.3% above its level of a year earlier. The capacity utilization rate for total industry moved up 0.6% in September to 79.3%, a rate that is 1.0% above its level of 12 months earlier but 0.8% below its long-run (1972–2013) average.

The Fall in Oil Prices and What it Means for Manufacturing

This week Michael Levi, of the Council on Foreign Relations, sat down for an interview with Audie Cornish on NPR’s All Things Considered about the recent decline in oil prices and its effect in the U.S. and around the world.

“One place where it will be interesting to watch is in manufacturing - not so much because of a direct impact from changing prices, but because if prices fall far enough for long enough, you'll see a pullback in drilling. And shale drilling uses a lot of manufactured goods - 20% of what people spend on a well is steel, 10% is cement, so less drilling means less manufacturing in those sectors,” said Levi.

“Texas is one of the economies that's highly vulnerable to declining oil prices. In the 1980s, when oil prices plunged, Texas was badly hurt. One of the good news stories today is that most states that were dependent on oil, like Texas, are more diversified than they used to be, so even if they're hurt, they aren't hurt as much.” 

Survey Offers Insight into Women and Manufacturing

A new survey from Women in Manufacturing and Plante Moran of over 870 women - including both experienced women currently working in manufacturing and young women who are just beginning to consider their career options - found that there is significant overlap between the top factors young women are seeking in careers and the factors manufacturing careers offer.

Young women ranked compensation as the most important factor they are seeking in a career, followed closely by work that is interesting and challenging. At the same time, more than 80% of women in manufacturing today say that their work is interesting and challenging and half of women in manufacturing say that compensation is the most significant benefit of the sector.

The survey also found that 74% of women working in manufacturing believe that the sector offers multiple career paths for women and that more than half of women in manufacturing today think that the sector is a leading industry for job growth for women. In addition, 64% of women working in manufacturing reported that they would recommend a career in manufacturing to a young woman.

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