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Trends in Manufacturing

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Keeping up with the news, here are a few highlights of trends in U.S. manufacturing.

The Institute for Supply Management, a trade group of purchasing managers, said Monday that its manufacturing index fell to 53.5 in January from 55.1 in December. That is the third straight drop and lowest since January 2014. Still, any reading above 50 signals expansion.


Article source: tradingeconomics.com

Economists weren't overly concerned by the report. Most said it is consistent with steady growth in the first quarter.

"This decline is no reason to panic," said Paul Ashworth, an economist at Capital Economics, in a note to clients. The report probably reflects the impact of the stronger dollar on large U.S. manufacturers that export many of their goods, he said. It does not capture the services firms, like retailers, that are benefiting from cheaper gas, which has lifted Americans' spending power, Ashworth added.

Bradley Holcomb, chairman of the ISM's manufacturing survey committee, said that cheaper oil is benefiting many manufacturers by cutting their energy costs. Article

The stronger dollar also lowers U.S. multinational corporations’ abroad profits. Last week, Procter Gamble, DuPont and Caterpillar all pronounced their gain took a strike from a clever dollar.

The abroad misunderstanding dampened a U.S. economy in a final 3 months of final year. Exports rose during a slowest gait given a commencement of a year. Meanwhile, imports, that turn cheaper when a dollar rises, jumped. The wider trade opening shaved enlargement by a commission point. 

In China

China’s factory sector unexpectedly shrank for the first time in nearly 2-1/2 years in January and businesses to see more of gloom, an official survey showed, raising expectations that the policy will be more action to forestall a stronger cooling.

The official purchasing managers ‘ Index (PMI) fell to 49.8 in January, the National Bureau of Statistics said on Sunday, a low-most recently in September 2012 and just below the 50-point level that separates growth from contraction, on a monthly basis.

The December level was 50.1, and a Reuters poll saw a better result, 50.2 for January. Only one of 11 economists in the survey forecast January contraction.

Most of the PMI indices showed a downward trend, which indicates that the current economic growth is still in a downward trend,” said Zhang Liqun, an economist at the development Research Center, a state think-tank.

Some economists said the January reading was mostly downbeat, as it is suggested that the factories did not enjoy a normal spike in business before China’s annual spring festival holiday, which falls in mid-February of this year.

The poor January official PMI fueled bets that further monetary easing was in store in the world’s second largest economy.  Article

Even with the news of slowdown in January, predictions says 2015 will be a good year for manufacturing and factories.  Here are a few predictions by John Zegers on OnlineTMD.com:

  1. Reshoring will continue, but at a slower pace
  2. The emergence of "Next-Shoring"
  3. A manufacturing boom will hit the United States
  4. Big data will drive big efficiency
  5. Increased investment in predictive maintenance
  6. Increased investment in capital equipment
  7. Manufacturing will grow at a higher rate than GDP

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Topics: Manufacturing Trends