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Manufacturing Springs to Life, May Lead Recovery

Manufacturing

The Institute for Supply Management’s factory index rose to 55.7, from 52.6 in September, the fastest pace in more than three years.

Factories are stirring back to life and could be the main drivers of an economic recovery.

The Institute for Supply Management’s factory index rose to 55.7, from 52.6 in September, the fastest pace in more than three years and the highest level since April 2006, the ISM said in a prepared statement.

The jump in the index was driven by production and employment, with both registering significant gains. Production appears to be benefiting from the continuing strength in new orders, while the improvement in employment is due to some callbacks and opportunities for temporary workers. Overall, it appears that inventories are balanced and that manufacturing is in a sustainable recovery mode.”

“Rising sales, boosted in part by the administration’s ‘cash-for-clunkers’plan, have led to a record plunge in stockpiles that will keep assembly lines humming. More than $2 trillion in global stimulus will also lift demand, while mounting joblessness signals consumer spending will be slow to rebound,” said a Bloomberg report on the index’s growth. Manufacturing is “laying the groundwork for a very strong inventory restocking cycle,” said John Herrmann, president of Herrmann Forecasting in Summit, N.J., who spoke to Bloomberg.

Thirteen of 18 manufacturing industries reported growth, according to the ISM, including:

  • Petroleum and Coal Products
  • Apparel, Leather and Allied Products
  • Furniture and Related Products
  • Chemical Products
  • Computer and Electronic Products
  • Transportation Equipment
  • Plastics and Rubber Products
  • Machinery
  • Food, Beverage and Tobacco Products
  • Printing & Related Support Activities
  • Fabricated Metal Products
  • Electrical Equipment, Appliances and Components
  • Paper Products

The three industries reporting contraction in October are:

  • Nonmetallic Mineral Products
  • Primary Metals
  • Wood Products

For more on the stimulus as well as manufacturing and industrial jobs:

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