Manufacturing is heating up and cranking out new products at
a rapid pace. According to the Institute of Supply Chain Management, the August
PMI rose to 59% (1.9% increase) when compared to the previous month’s numbers
of 57.1%. The improvement is the highest experienced in 3 ½ years helping
support the smooth running of America’s economic engine. Basic materials have a
fundamental impact on the growth of manufacturing within their associated sectors
as the products make their way throughout the national supply chain.
As the country seeks to capitalize on its new found growth
it is important to ensure that a positive business environment employs and
develops matching competencies in the manufacturing labor pool. Economic expansion will have a difficult time
continuing unless highly skilled and motivated employees are available to fill future
employment opportunities. Companies should
bolster education and training to secure a ready labor supply and raise income
based on performance.
Of the total of 18 industries measured 17 achieved a level
of growth. They are “Plastics & Rubber Products; Furniture & Related
Products; Fabricated Metal Products; Apparel, Leather & Allied Products;
Wood Products; Printing & Related Support Activities; Miscellaneous
Manufacturing; Paper Products; Petroleum & Coal Products; Food, Beverage
& Tobacco Products; Nonmetallic Mineral Products; Chemical Products;
Primary Metals; Transportation Equipment; Computer & Electronic Products;
Machinery; and Electrical Equipment, Appliances & Components (1).” In competition with
cheaper foreign imports, the Textile Mills is the only industry that predictably
lost ground.
The type of industries experiencing growth is fundamental to
improving manufacturing in other economic sectors. The basic supplies of
manufacturers become resources for other arenas that further refine the
materials into a final exportable product. As the fundamental industries grow it
is also possible to envision secondary manufacturers picking up pace in the
near term.
Backlogs of orders increased 3% showing demand is high in the
near term and pushing opportunities for growth into the next quarter. Exports
of manufacturing rose 2% and imports rose 4% enhancing an already voracious supply
based appetite. Companies are starting to invest in the economy again and
attempting to expand their capacities. Orders are matching expectations and
some companies will need to wait to obtain supplies for expansion. Company
strategic planning will become essential to capitalize on the improved market.
If you read the business news on a regular basis you may
also notice that consumer confidence and spending are also rising in a way that
supports sustainable growth. A caveat is
the increasing imports over exports. As American companies become stronger, nimble,
and reach cost parity with low cost foreign suppliers it is hoped the numbers
will slowly shift in the other direction. At present, if these basic materials
are manufactured into higher quality exports the economy may raise its
financial profile.
