Business strategy may need revision: U.S. manufacturing growth slows

July 25, 2012

The U.S. manufacturing sector has been on a whirlwind ride over the past several months, and a new reading added to confusion as it showed that growth in the industry slowed slightly during the past month.

UPI reported that the latest data from Markit Research showed that growth in the sector was at its weakest level in 19 months during July, an indication that demand could be slowing down due to global economic malaise.

According to the news outlet, the research firm's purchasing managers' index, which is based on 85 percent of the month's survey results, fell from 52.5 in June to 51.8 in July, as the production and new orders indicator dropped to its lowest point in a year.

However, the number remained above 50, which means that growth is still occurring in the sector, despite the state of the global economy. The employment picture also looked up in the report from Markit Research, as this index rose from 52.8 to 52.9, giving the industry some positive news.

"The U.S. manufacturing sector is clearly struggling under the pressure from falling exports, which showed the first back-to-back monthly decline for almost three years in July," said Markit chief economist Chris Williamson. "Reassuringly, domestic demand appears to be showing ongoing signs of resilience, encouraging firms to take on more staff."

Reuters reported that the numbers may not be as bad as they appear, as new orders grew if the index were to include domestic demand.

While the data can be tempered by this type of domestic stability, a change could be coming in the near future for the U.S. economy.

"Overall, the third quarter is so far shaping up to be worse than the second quarter in terms of growth, which is a growing concern for policymakers," Williamson said in a statement.

The sector could continue to be sustained by an insourcing trend, however, as companies are increasingly bringing operations back to the U.S., according to The Fiscal Times.

"When we do the numbers we're actually ahead manufacturing here instead of paying for air freight and dealing with the logistical issues that we're having in China," Raymond Sjolseth, the president and co-founder of Seesmart Inc., told the news outlet.