U.S. Manufacturers report positive earnings

April 26, 2012

Though the European recession and a period of slow growth in China have affected the global markets, large industrial companies in the U.S. have seen positive results for the first quarter of 2012, The Wall Street Journal reported.

According to the news outlet, the companies have performed well in the domestic market, as the results that were reported showed that manufacturing beat expectations of analysts across the board.

"We're off to a good start this year," Inge Thulin, the new chief executive for 3M, told the Journal. Though the companies sales to Asia and Europe were weaker than expected, the company sold more adhesives and other materials to makers of cars, airplanes and energy equipment in the U.S.

According to the news outlet, other manufacturing companies reported positive results in the first quarter, and the signs that point to a recovery in the U.S. have led to a shift in business strategy toward expansion and growth.

"A lot of the positive earnings surprises are in manufacturing," Ed Yardeni, an economist in Brookville, N.Y., told the Journal. He noted that expectations were too low, partly due to fears about the European recession and rising oil costs. The U.S. economy "is on firmer ground this year," even if it isn't "rip-roaring." He spoke to how this has helped many manufacturers continue expanding sales and profits.

Industrial production rose at an annual rate of 5.4 percent in the first quarter, pushed up by the strength of the automobile industry. However, part of this resurgence is tied to the fate of Europe and China, and if these regions see a significant decline in the coming months there may be a reversal of the positive movement by U.S. manufacturing.

According to a release from Fitch Ratings, the positive results for U.S. manufacturers are masking the decline of the Chinese industry, which could have either a positive and negative influence on the American sector.

Since China is the top competitor for U.S. manufacturing, the American sector could benefit, but this could also signal a drop in demand from the Asian superpower, something that may affect production levels across the world.

The release noted that new orders at U.S. companies have not expanded at a blistering pace, but there has been a steady climb since the beginning of 2012.