As global financial markets continue to fluctuate, the American economy is showing signs of strengthening, driven by manufacturing growth. While September had seen a brief pause in growth, with American manufacturing output dropping by 0.5 percent, the sector has rebounded in October back to the point it was at in August. Overall, this reflects the fact that U.S. manufacturing has demonstrated consistent growth in recent months.
The growth is measured through the purchasing managers index (PMI) as determined by the Institute for Supply Management. This is a survey of purchasing managers throughout the United States, across a variety of fields, and it is a general indicator for the health of manufacturing. A PMI over 50% indicates manufacturing expansion. The August and October readings of 59% were the highest readings in over three years.
There are a number of factors that are contributing to this ongoing growth. The primary factor is the “onshoring” of jobs. This refers to the idea of bringing jobs that had been sent overseas back to American soil. Some of this is due to the pursuit of increasing quality, while some is due to the rise of wages in emerging markets where American companies had been outsourcing work.
In addition to onshoring, U.S. manufacturing growth has been spurred along by the reduction in domestic energy prices. From an increase in natural gas production, to weakening of oil prices, to an increase in inexpensive renewable energy sources, American manufacturing is getting more out of each dollar used to provide energy for processes. Not coincidentally, the only industry reporting a drop in recent times has been Petroleum & Coal Products.
Finally, one of the factors that has contributed in the long-term expansion has been the increased push for STEM (science, technology, engineering, math) education over the last decade. This push is now coming to fruition, with increased research and development and rapid innovation.
While it is unlikely that this is a true manufacturing renaissance, as claimed by some, it is most certainly a transformation. At the very least, it is reinvigorating the manufacturing sector and our overall economy. Here at Ashley Industrial Molding, we are pleased to be part of the manufacturing growth and the United States, and we look forward to continuing to help spur it along for years to come.