Research firm Markit’s latest Purchasing Managers Index (PMI) found that manufacturing and services in the United States grew steadily in March, with the index rising to 54.9 from 54.3 in February. The monthly reading was the second-highest PMI level in close to a year.
“Manufacturers reported a reassuringly strong upturn in business conditions in March, adding to evidence that the U.S. has enjoyed a solid upturn in economic growth so far this year,” Chris Williamson, chief economist at Markit, explained. “Manufacturers reported a further robust increase in production and new orders in March, rounding off the strongest quarterly expansion for two years.”
The new orders index climbed to 55.9 in March, up from 55.4 the prior month, supported by another increase in domestic demand. Overall demand was also boosted by strong growth in export orders, which rebounded to 51.2 this month from 48.5 in February. Manufacturing production continued to increase in March, albeit at a slower pace, with the index falling to 56.8 from the 11-month high of 57.3 in February. Readings above 50 indicate expansion.
Meanwhile, indicators suggest manufacturers hired additional staff in March, with the employment index rising to 54.6 from 53.5 the preceding month. Companies attributed the boost in job creation to higher production requirements.
“The data point to manufacturing output rising at a quarterly rate of approximately 2 percent in the first quarter, and roughly 15,000 jobs being created each month so far this year,” Williamson added. “The goods-producing sector is therefore showing reassuring resilience in the face of fiscal headwinds at home as well as ongoing uncertain economic conditions in major export markets, such as Europe.”
Commerce Dept. Appoints New Manufacturing Council Members
The U.S. Department of Commerce last week announced the appointment of 26 new members to the 2013 Manufacturing Council.
The 30-member Council of manufacturing professionals, who come from a wide range of industry sectors, was founded in 2004 to liaise between the manufacturing world and the U.S. government. The Council, which includes representatives from the medical, steel, textile, and semiconductor industries, works with the Secretary of Commerce to advise on manufacturing public policy, while the Secretaries of Labor, Energy, and Treasury consult with the Council on related policies.
“Keeping our manufacturing sector strong is critical to job growth in the United States,” Secretary of Commerce Rebecca Blank said. “The Department of Commerce is focused on supporting U.S. manufacturers as they build things here, so they can sell them everywhere. The Council has an important role to play in shaping the direction of our nation’s manufacturing strategy and supporting American businesses and workers.”
For the full list of members of the 2013 Manufacturing Council, including representatives from the Mac Arthur Corporation, TAG Holdings, Cisco Systems Incorporated, Dow Chemical, and Kennametal, click HERE.
U.S. Leading Economic Indicators Improve
The index of U.S. leading economic indicators rose in February at a moderate pace, as a strengthening housing market and improved labor market helped boost the outlook for overall business. The Conference Board’s Leading Economic Index (LEI) for the U.S. increased 0.5 percent last month to 94.8, following a 0.5 percent gain in January, and a 0.4 percent rise in December.
February’s reading slightly exceeded expectations, as economists polled by MarketWatch had forecast the LEI to rise by only 0.4 percent for the month. The gains were also more broadly based than in earlier months, with eight key indicators posting gains in February, compared to five in January and six in December.
“The U.S. economy is growing slowly now, and this reading increases hope that it may pick up some momentum in the second half of the year,” Ken Goldstein, an economist for the Conference Board, noted. “However, this latest report does not yet capture the recent effects of sequestration, which could dampen the pickup in GDP.”
The LEI is a weighted gauge of 10 indicators tracking business cycle peaks and troughs. The eight indicators that rose last month were led by a gain in housing permits, fewer layoffs, a longer manufacturing work week, and rising stock prices.
“A steady recovery in housing and rising job gains could be offsetting the [sequestration] cuts…” the Associated Press explains. “Automatic government spending cuts of $85 billion kicked in March 1, though their impact may not be felt until April and May when layoffs at government agencies and contractors will likely start.”
Metalforming Industry Forecasts Growth
Metalforming companies can look forward to three months of steady growth following March, according to the latest business conditions report from the Precision Metalforming Association (PMA).
Of the 114 metalforming companies surveyed, 36 percent forecast an improvement in economic activity over the next three months, slightly down from 37 percent predicting the same thing in February. An additional 58 percent of respondents predicted no change in economic activity, up from 55 percent in February, and only 6 percent expected activity to decline, down from 8 percent last month.
Furthermore, 46 percent of metalforming companies saw their March average daily shipping levels tick up (from 40 percent in February) and 42 percent saw no change (up from 37 percent). Only 16 percent saw a decrease (down from 23 percent).
“PMA’s manufacturing member companies reported fairly strong orders and shipments in the first quarter of 2013 vs. the last quarter of 2012,” William E. Gaskin, PMA president, noted. “However, compared to the first quarter of 2012, they are operating at similar levels. In calendar year 2012, orders and shipments started strong, then fell off substantially in early summer, recovered somewhat in early fall and then fell sharply again at year-end. In 2013, the trend line looks pretty similar so far. The real question will come as summer approaches, as to whether there will be a pull-back in consumer spending that impacts the rest of the year.”
Jobless Claims Inch Up
New initial jobless claims rose slightly in the latest week reported, but remained near a five-year low, suggesting layoffs may have stabilized at pre-recessionary levels. According to the U.S. Department of Labor, unemployment claims for the week ending March 16 edged up by 2,000 to a total of 336,000.
However, the four-week moving average, which smoothes volatility and provides a clearer long-term picture of labor market conditions, fell by 7,500 to 339,750, marking the lowest level since February 2008.
“Jobless claims are considered a proxy for layoffs, and their recent lows coincide with other data indicating that layoffs at the start of 2013 were back at pre-crisis levels,” CNN Money reports. “During the recession, employers cut their payrolls to the bare bones. Productivity per worker continued to increase steadily, reaching a post-World War II high. Low layoffs signal that employers may finally be out of cost-cutting mode and ready to ramp up hiring at an even faster pace…”
Although the private sector has added an average of nearly 200,000 jobs per month in the last four months, marking a sharp increase from the summer, the national unemployment rate has hovered at just below 8 percent this year.