Manufacturing Acceleration Underway?

Source: From the ControlDesign.com News Desk

Oct 09, 2013

National Association of Manufacturers (NAM) chief economist Chad Moutray says there is a growing sense that manufacturing activity is accelerating in the second half of 2013.

He pointed to the August Institute for Supply Management's Purchasing Managers' Index, which showed strong growth in new orders and production for the month, building on healthy numbers for July.

"The latest National Association of Manufacturers/IndustryWeek Survey of Manufacturers is largely consistent with this pickup — a welcome change given the frustratingly slow pace over much of the past year," he reported. "Yet, even with the improvements, demand and production growth has been mostly modest at best, with increases in hiring still lagging behind. Manufacturing production has risen just 1.3% year-over-year, and the sector has added just 20,000 net new workers during the past 12 months."

The NAM/Industry Week survey closely tracks these trends. After declining to about 52% at the end of 2012, the percentage of respondents saying that they were positive about their business outlook rose to 70% in March and 72% in June. In this latest survey, Moutray reports that percentage edged slightly higher to 76%. But, the 73% average in the first three quarters of 2013 was well below the 80% average in the same time period last year.

cd1310 expected growth

At the same time, Moutray reported, manufacturing leaders are concerned about a number of possible challenges on the policy front, many of which will culminate this fall. Almost two-thirds of respondents said it is extremely important for their business that the President and Congress make progress on funding the government for the next fiscal year and in extending the nation's debt ceiling. Part of this conversation could involve ways to avert the across-the-board federal budget cuts (sequestration).

Moreover, Moutray said, more than 90% of respondents indicated that addressing the nation's fiscal challenges was either moderately or very important for their company.

Other questions included:

"How would you characterize the business outlook for your firm right now?" Nearly 15% replied "very positive," and 61% were "somewhat positive." Less than 1% were ‘very negative."

"Over the next year, what do you expect to happen with your company's sales?" About 14% expected an increase of more than 10%, 21% foresee growth of 5-10%, and nearly 31% expect growth up to 5%. Less than 3% expect a decrease of 5% or more.

Asked about their capital investment plans, nearly 46% expect it to remain at 2012 levels, but 43% will increase that spending in increments ranging from less than 5% to more than 10%.

Nearly 18% say they'll increase export levels by more than 5%, 9% expect +3-5%, and 15% foresee a gain of up to 3%. Some 54% expect no real change, and practically none of them anticpate significant loss.

Read the entire survey results.

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