Manufacturing confidence grows as end of year approaches

December 28, 2012

Orders for durable goods increased in November, fueling speculation that the economy is set to grow despite the financial standoff in Washington D.C.

According to The Associated Press, figures released by the Commerce Department showed that overall orders for long-lasting manufactured products rose by 0.7 percent in November, while business investment was shown to increase  by 2.7 percent. This apparent surge in orders was the second in two months, with economists believing that the specter of the fiscal cliff was not enough to deter manufacturers from taking advantage of demand.

Most sectors in the industry showed significant improvement, with orders for commercial aircraft the only notable exception. U.S. manufacturers that produce non-transportation-related goods reported that orders were up across the board, with machinery parts and computers recording rises of 3.3. percent and 3.1 percent respectively.

While commercial aircraft orders have dropped, the automobile industry is still considered to be ending the year in more robust health. The recent announcement by Ford that it intends to invest $6.2 billion to expand its U.S. manufacturing base in Michigan was greeted with enthusiasm by industry analysts and, according to NBC News, the company expects to add 12,000 jobs to the region by 2015.

"These investments, many of which are already under way, will ensure our southeast Michigan manufacturing facilities can support our aggressive growth plans," said Jim Tetreault, the Ford vice president in charge of North American manufacturing.

This decision to commit to quality management in manufacturing in the heartland of America sits in tandem with a reported 3.6 percent rise in auto output and associated industries, according to the Federal Reserve Bank of Chicago. This reversed the position that the industry faced in October, when the Midwest posted a decline in output of 1.1 percent.

Figures for December are naturally yet to be released, but a mid-month survey by financial analysts Markit shows that the industry is likely to report its best figures for eight months. According to Reuters, the Purchasing Managers index rose to 54.2, the highest since April and may be a sign that continued confidence in manufacturing is not misplaced.

"The index signaled solid improvement in the U.S. manufacturing business conditions during December," said a spokesperson for Markit to the news source.

Although a separate survey by the Institute for Supply Management had demonstrated that U.S. manufacturing had contracted in November, the federal government confirmed on December 20 that the economy had grown by an annual rate of 3.1 percent in the third quarter.