Each week we’ll take a closer look at the economic news, data and trends impacting leading U.S. manufacturers and their specific industry sectors. Led by the creation of a new Manufacturing.net index, this weekly update will offer special insight on the manufacturing marketplace and the factors driving it … up and down.
This week’s analysis shows conflicting energy prices, improving global economic confidence, and a continued fluctuation when it comes to U.S. manufacturing investments.
The Manufacturing.net index analyzes subsets of manufacturers in a number of sectors to generate overall trending. For the week, the index started at 3894.09 and saw an increase of about six points, with gains in the aerospace and medical fields offsetting bad weeks in the automotive and food and beverage sectors.
Recalls from Ford and Hyundai, along with some rising food ingredient costs could be the culprits of declines. Pharmaceutical companies Pfizer and GlaxoSmithKline are on the uptick, with GSK fighting some serious IP battles in Asia. The performance of these companies and chemical processors such as Eastman, are keeping the processing sector on the upward tick, despite losses experienced by the major oil companies.
Despite fears inspired by Obamacare and its pending taxes, medical device manufacturers saw gains this week as well. Additional manufacturing data released this week:
Energy:
- Oil is down to $103.85/barrel after peaking at over $107/barrel last week. This is reflected in the losses experienced by all the major oil companies during the week.
- Natural Gas prices are up about $0.09 to $3.46/MMBTU, up from $3.37 last week.
- Average gasoline prices in the U.S. are $3.57/gallon, roughly the same as a week ago, but down almost $0.13 from a year ago and $0.10 cents from a month ago.
While stable or decreasing oil prices help lower production and transportation overhead costs, manufacturers will be keeping an eye on natural gas prices as parts of the country head into cooler fall weather in the coming months.
Purchasing Confidence:
- U.S. financial officers gave the economy its highest score in five years and were significantly more confident about economic growth in the latest Bank of America Merrill Lynch CFO Outlook survey. The U.S. economy received an average score of 58 out of 100, up from 49 in the previous survey. CFOs gave the global economy a score of 51, up from 45. CFOs voiced even stronger optimism about economic growth, with 55 percent expecting expansion in 2013. CFOs gave the manufacturing sector a score of 57 out of 100, up from 53 in the previous survey, and it highest mark since 2011.
- U.S. construction machinery exports dropped 21 percent during the first half of 2013, with $10.8 billion shipped to global markets, compared to $13.7 billion at midyear 2012, according to the Association of Equipment Manufacturers (AEM). Nearly all world regions recorded double-digit declines, except Central America with a double-digit gain. The top countries buying the most U.S.-made construction machinery during the first half of 2013 were:
- Canada - $3.7 billion, down 15 percent
- Mexico - $1 billion, up 18 percent
- Australia - $715 million, down 63 percent
- Brazil - $513 million, up 17 percent
- Chile - $475 million, down 38 percent.
- June U.S. manufacturing technology orders totaled $426.83 million according to the Association for Manufacturing Technology. This is a decrease of 5.7 percent from one year ago.
- Industrial production was flat in July, with manufacturing production falling 0.1 percent, stated a report from the Manufacturers Alliance for Productivity and Innovation (MAPI). This comes weeks after the ISM index indicated a surge in July production, and the Bureau of Labor Statistics reported manufacturing employment rising in July. Digging deeper into the BLS employment numbers shows that while employment rose, average weekly hours and average overtime hours fell.
Re-shoring
- According to the Reshoring Initiative, U.S. manufacturers have added more than 500,000 jobs since the end of June 2009. While much of that job growth is attributable to pent-up demand, the Initiative says at least 10 percent of those gains were created by companies bringing manufacturing back to the U.S. from overseas.
