The manufacturing sector has certainly seen its share of ups and downs, but so far this year is proving to be a strong year in sales for the industry. While there was a 1.3% drop in January, the Commerce Department announced that orders for durable goods rose a promising 2.2% this past February, the highest the industry has seen in three months.
It was reported that the increase was driven by a surge in commercial aircraft orders, and generally that particular market fluctuates on a monthly basis. In fact, demand for commercial aircraft jumped to 13.6% after seeing a drastic 22.1% drop just the month before. Meanwhile, orders for motor vehicles increased as well, jumping 3.6% in February after seeing a 1.9% drop in January. Demand also rose for primary metals, including steel.
The Institute for Supply Management’s original estimate of manufacturing activity grew faster than expected in February as the manufacturing index rose to 53.2 in February, up from 51.3 in January. Analysts predict that the growth rate in the manufacturing will continue to rebound as much as 3 percent for the remainder of the year. Economists believe that manufacturing output will strengthen this spring thanks to better weather after the US suffered through truly severe snow storms this past winter. If the manufacturing industry continues on this trajectory, it will turn out being the fastest annual economic growth since 2005.
Manufacturing is growing in the US at a substantial rate over these past few months, surpassing expectations and showing that the industry has served as a source of strength for the economy recently. According to Bloomberg.com, manufacturing accounts for roughly 12 percent of the economy. Of the 18 industries covered, 14 reported expansion in October, most of which were led by textile mills, according to the ISM. In fact, the Institute for Supply Management’s index is currently the highest it’s been since April 2011, reaching 56.4 this past October, up from 56.2 in September.
In addition to this growth, the ISM reported that the measure of US new orders has exceeded 60 for three consecutive months, the longest since the beginning of 2011. Supplier deliver times have also grown, rising to their highest level since June 2011, and an index of production cooled to 60.8 from 62.6.
US manufacturing has seen its fair share of struggles in terms of finding qualified people to work for the industry, but now, as these numbers show, the industry is starting to become stronger. Skeptics can see that manufacturers are steadily rising in the market, and if the industry stays on this track, it can only lead to the job market becoming stronger. The Boston Consulting Group has even predicted that manufacturing could create up to an additional 5 million jobs by 2020. As long as the momentum stays strong, and young people get involved through STEM education, the trajectory will lead to even more substantial growth in the years ahead.