U.S. Manufacturing Output Reaches 4 Month High

The latest Manufacturing ISM Report On Business shows that economic activity in the manufacturing sector continued to expand in June, reaching a 4-month high. Comments from the panel who compile the report at the Institute for Supply Management (ISM) indicate that demand remains strong and this trend is likely to continue.

17 out of 18 manufacturing industries reported growth in June over May, and the last one was the same, meaning that none of them reported a decrease in output.

Data from the Federal Reserve shows that factory output rose by 0.8% and that the amount of plant in use rose by 78%. From April to June, manufacturing showed growth of 1.9% making it the third quarter in a row that this sector has expanded.

The May figures were affected by a major fire at a parts supplier in the motor industry, but that did not decrease the number of cars sold according to General Motors and Ford. The amount of cars manufactured in June increased by 7.8%, but increases were reflected in all areas of consumer goods and business equipment.

Mining production, oil and gas drilling all fared well too. In fact, the index of mining for June surpassed the previous high, which was recorded in December 2014.

There are concerns about the prices of raw materials increasing and about the tariffs the government has imposed, in case these affect the supply chain. Then businesses may have trouble coping with demand, and manufacturing output might fall.

Manufacturing accounts for about 12% of the US economy so is an important industry that should be looked after. It is hoped that the lower corporate taxes will go some way towards helping them.

Many more manufacturers are using flow meters, like the ones at http://www.flowmeters.com/, as well. These are so flexible in their types and measurements they take, that they have been found to make factories more efficient and boost production.

Oil Production Reaches Highest Level Since 1970

2018 was also the year that saw US oil production reach the highest level since 1970. It first surpassed the amounts in November last year, and the production has continued to increase.

This is another milestone for the US economy. The US oil production has already reached the same level as Saudi Arabia, and it is expected to produce more than them this year. The International Energy Agency has said that the US could even rival Russia, which is the biggest oil-producing nation of all. That would be an amazng feat.

The only problem this might cause is a drop in oil prices, which have not long recovered from the previous fall.

Biggest Growth Spurt Since The Recession

The US economy has experienced the biggest growth spurt since the recession of nine years ago, doubling the expected GDP of 2% to 4% in the first quarter of this year.

The expansion in manufacturing, mining and the increase in drilling for oil and gas all contributed to this and a further growth is expected for the second quarter of probably about 3%.  If that is confirmed, the GDP for the year is looking good and economists are feeling optimistic about the future.

This is a short period to get too excited about the economic future being sound, but consumers fuel the growth with what they buy and they seem to be doing that more than ever at the present time. In fact, the demand is so high for some products that there are now shortages of the materials needed, and consumers have to wait for their goods to be delivered.

The manufacturing growth particularly has created more jobs as well, which means that more people have more disposable income to spend. It has also created a lack of skilled labor in some manufacturing areas, and employers are now getting very keen to restart training programs that had to stop at the time of the recession.

A strong economy could result in lower unemployment, more wage rises, and bigger profits for the companies, although it is not, as you can see at http://www.oecd.org/newsroom/, without its risks. However, should all go as planned, this in turn, would  give everyone more confidence and a higher standard of living, which means they buy more and this further increases the good being manufactured.

The last time there was anywhere near this amount of growth in the US economy was in 2005, when the GDP for the year reach 3%, and the 12 years since have been the longest period ever where that figure has not been reached.

For more than a decade, the US has been experiencing slow growth, but now being led by manufacturing, it looks as though that has changed.