Is Manufacturing Manufacturing's Best Customer?

July 17, 2012

Looking at the Federal Reserve Board's report that industrial production increased 0.4% in June, you have the immediate impression that manufacturing is continuing its heady upward path. After all, 15 of the 20 manufacturing sectors grew in June.

But Daniel J. Meckstroth, chief economist for the Manufacturers Alliance for Productivity and Innovation (MAPI), cautions: “Industrial activity is on a seesaw pattern with an average that equals slow growth. Measuring quarter-to-quarter reveals that manufacturing production grew at only a 1.4% annual rate in the second quarter of 2012. All the growth in manufacturing production has been in durable goods as there is pent-up demand for motor vehicles and machinery and equipment from postponed replacement cycles. Nondurable goods manufacturing declined at a 3.4% annual rate in the second quarter.

“It is important to think of manufacturing in the context of a sluggish U.S. economy and struggling world economy,” Meckstroth says. “Consumers are income-constrained and lack the collateral to use credit to spend more than their incomes. When they spend more for new auto payments they have to spend less somewhere else. Export growth is difficult to sustain in light of the recession in Europe and slowing growth in China. The sweet spot in the outlook is business spending for factories and equipment. Less uncertainty about the fiscal cliff, regulation, and growth would certainly help business confidence in making these investments.”

Popular Sponsored Recommendations

What Does Agility Look Like for Today's Auto Industry?

Dec. 4, 2023
Without modern technologies, enterprises aren't able to fully analyze the risks and respond to ongoing supply chain issues and semiconductor shortages.

Navigating Disruption: A Leader’s Guide to Strategy Under Uncertainty

Nov. 1, 2023
AI, sustainability, digital--industrials are facing disruptive forces that are redefining what it takes to win. What got your company where it is today won’t get you where you...

Electric Vehicles Spark New Opportunities in the Automotive Industry

Dec. 4, 2023
Automakers have increased plans to produce Electric Vehicles to meet customer demand for low emissions. With this radical shift, new opportunities and challenges for the auto ...

The Benefits of Continuous Thermal Monitoring

Oct. 17, 2023
Read this eBook to learn more about collecting and using data intelligently to improve performance.

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!