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Spending, Hiring and Building Momentum: Sizing Up The Manufacturing Economy at Midyear

June 26, 2024
Long-term structural trends may be crucial to completing the economy’s soft landing this year and next.

An image of U.S. consumers handing the baton of economic growth to the business sector would be an upbeat (and admittedly oversimplified) way to digest several recent pieces of economic data and sentiment as we run toward the second half of 2024. But that idea does do a fairly good job of illustrating what appears to be happening in the U.S. economy as its growth rate slows and it continues to normalize from the extremes of the COVID-19 pandemic and its aftershocks.

Economists, market observers and leaders of consumer-focused companies have found consensus around the assessment that U.S. shoppers and diners are still in decent shape but also are no longer building on their spending boom that fueled much of 2023’s stronger-than-expected GDP growth. Combined with a labor market that is (for now at least) gently weakening, they see the proverbial soft landing taking shape nicely.

Business leaders look to be playing a part in that landing. They aren’t expecting a boom but they have grown more confident over the past year in the prospects of their firms. They also are generally worrying far less about the labor and supply-chain pains they’ve endured since 2020. For instance:

  • June’s U.S. Composite Purchasing Managers Index from S&P Global showed growth at its fastest pace since the spring of 2022. Services businesses led the way, analysts said, but manufacturing output also rose for the fifth consecutive month and new factory orders posted their best performance in three months.
  • Optimism among more than 400 CFOs surveyed by researchers at Duke University’s Fuqua School of Business as well as the Federal Reserve banks of Atlanta and Richmond has risen every quarter since mid-2022 except for two—when it stayed level. On average, executives expect their companies to post revenue growth of 5.5% this year and 8% in 2025. They also plan to grow their payrolls by 5.3% in 2024 and another 4% next year.
  • Manufacturers in Texas also are upbeat about what lies ahead—even though their assessment of broader business conditions fell this month. Executives’ take on their companies’ prospects rose for the seventh successive month and their view of future general activity has climbed to its highest level since February 2022.
  • Real gross private domestic investment is a big driver of the GDPNow tracker from the Atlanta Fed estimating second-quarter GDP growth of about 3%. Fed analysts are forecasting that spending on equipment, buildings and inventories is growing this quarter at an annualized rate of more than 8%. Is that sustainable? Not at all. But does it say good things about business leaders’ overall disposition? Very much so.
About the Author

Geert De Lombaerde | Senior Editor

A native of Belgium, Geert De Lombaerde has been in business journalism since the mid-1990s and writes about public companies, markets and economic trends for Endeavor Business Media publications, focusing on IndustryWeek, FleetOwner, Oil & Gas JournalT&D World and Healthcare Innovation. He also curates the twice-monthly Market Moves Strategy newsletter that showcases Endeavor stories on strategy, leadership and investment and contributes to other Market Moves newsletters.

With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati in 1997, initially covering retail and the courts before shifting to banking, insurance and investing. He later was managing editor and editor of the Nashville Business Journal before being named editor of the Nashville Post in early 2008. He led a team that helped grow the Post's online traffic more than fivefold before joining Endeavor in September 2021.

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