Manu-facts & Figures

Where do we stand with factory output?

electric motor repair shop

Will electric motor repair shops such as this one suffer from manufacturing declines?

Here’s the definite positive: A report on Wednesday showed a monthly increase in factory output for the first time in three months.

The Bloomberg survey revealed an 0.4 % uptick in manufacturing for last month, which exceeded expectations, and the median forecast, after a 0.1% drop in September and negatives in the two months prior. These numbers, provided by the Federal Reserve, did show a drop in total industrial production, however, for a second month in a row. Bloomberg attributes this to reduced electricity demand during a warm month and cutbacks in the oil industry. For the October increase, it cited construction materials and motor vehicles as the key contributors. Utility output fell 2.5 percent last month, the most since April, after rising 1.2 percent. Last month was the warmest October since 1963, with 14 states experiencing temperatures much above average, according to the National Oceanic and Atmospheric Administration.

From the vantage point of a single state, things may look bleaker.

A report from the New York Federal Reserve’s Empire State manufacturing index, released Monday, has the index coming in at minus 10.7. Negative numbers indicate contraction- something supported by the survey’s findings that New York factories cut jobs for the third straight month. New orders suffered as well, albeit at a slower pace, and the index did at least increase slightly from minus 11.4 in October.

“U.S. manufacturers have been hammered this year by a slowdown in China, the world’s second-largest economy, weak growth in Europe and a stronger dollar, which makes U.S. goods pricier overseas. Falling oil prices have also cut into orders for steel pipe and other drilling equipment. There are signs the manufacturing slowdown could be bottoming out. The overall index and measures of shipments and new orders rose last month, even as they stayed in negative territory. Other recent data have also suggested that factory output could turn around. The Institute for Supply Management, a trade group of purchasing managers, said earlier this month that its measure of new orders received by U.S. manufacturers jumped in October. And a gauge of production rose for the first time since July. In the Empire State report, a measure of employment ticked up slightly to minus 7.3, from minus 8.5. A separate category showed that New York manufacturers are cutting back sharply on their stockpiles, which can slow production in the short run. But reducing excess goods in warehouses and on store shelves can set the stage for a future rebound if customer demand stays high, forcing companies to restock goods.”

Meanwhile, a CNBC article reflects the overall outlook, suggesting that the entire industry is attempting to weather a recession. This can be traced back to September 2014, when the industry reached its last peak.


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