US Manufacturing Up for Second Straight Month

The most recent report by the Institute for Supply Management points to an increase in manufacturing in the United States. The ISM index which measures factory activity measured 51.7 for the month of October; anything above 50 indicates growth. This is the second month in a row that manufacturing has been on the increase following three consecutive months of contraction.

The optimistic report on American manufacturing was met on Friday by a less favorable report on European manufacturing for the month of October. The Eurozone experienced another month of factory output decline, totaling 15 consecutive months now, going back to the summer of 2011. The European report was based on a survey of purchasing managers by Markit Economics, a research firm, and showed signs that the manufacturing decline, which started at the periphery of the Eurozone, has now spread Germany as well.

Meanwhile in China, manufacturing rebounded somewhat from a month earlier. For the month of October, the HSBC China Manufacturing Purchasing Managers Index rose to 49.1, up from 47.9 in September. China is still in a manufacturing downturn which has seen twelve straight months of PMIs below 50.

Looking at the statistics from economies all over the world, there is increased optimism about the role of the U.S. in leading the way to a worldwide recovery in manufacturing output. It remains to be seen, however, if the U.S. can continue this upwards trend for the next few months. Several factors will influence the prospects of manufacturing growth in the U.S. and these include the outcome of the election, fiscal policy, and overseas demand for manufactured goods. The looming fiscal cliff presents another obstacle that needs to be dealt with in order to enable a more sustainable growth trend in manufacturing.

Posted by: Samuel Benka

Sources: The Associated Press, The New York Times, The Wall Street Journal, Reuters

Photo Credit: ABB Assembly Line Robot Courtesy of Flickr user avramc

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