Featured # Markets | 2 years ago

Acceleration in US Factory Activity

February is a month of growth and acceleration for U.S. factories and manufacturing. Based on recent surveys, production and inventory levels are showing the manufacturing downturn coming to an end. With a rising index from ISM over the past two months and auto sales rising, spending on construction is going to increase factory activity and combat weak global demand and low oil prices. The outlook for manufacturing is also being boosted by data from higher levels of spending and orders for U.S. manufactured goods.

February’s index read at 49.5. Despite this rating holding below 50, where an industry is deemed to be in a time of expansion, the past two months have shown a rise in the right direction for future growth of factory activity. Increases in industrial production also came with an increase in orders for long-lasting goods to be manufactured in the U.S. In comparison to Europe, where activity is fading, the U.S. manufacturing market is on an upward trend. Next, this quarter’s data is easing minds of possible recessions, especially with support from carmakers whose demand for manufacturing could continue to increase need for U.S. manufacturing and provide U.S. consumers with more confidence in the auto market.

Hitting a 15-year high, auto sales soared to a high in the month of February, leaving carmakers with an optimistic mindset and in turn a higher need for inventory. The economy is regaining momentum and vehicle sales could be a strong supporter for U.S. factories and long-term manufactured goods. The economic outlook is also strong, with rising construction spending, encouraging production growth and potentially boosting factory activity even more. Though the data is not indicating an economic boom, the numbers are still supporting the growing trend of the economy, and in turn, the manufacturing industry.

Data from the Commerce Department has showed construction spending rising by 1.5%, increasing first-quarter growth. Further construction reports from January and February are also showing stability, further supporting the prospects of growth and acceleration of factory activity and U.S. manufacturing this year.

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