U.S. Manufacturing is expanding beyond projections, bouncing back from an eight-month low in February. According to the Institute for Supply Management (ISM), their index of national factory rose from 51.3 to 53.2 from the month of January to the month of February. February’s 53.2 surpassed the projected number of 52.0. Any reading above 50 shows expansion.
Other numbers have shown that consumer spending has increased more than expected over the months of January and February. This is figured to be because of the increase in home-heating bills and the household enrolments in the Obama Administration’s health-care program.
However, the boom in U.S. manufacturing could have been much larger if not for a shortage of parts, which caused a slump in certain areas of production. While this hurt the past month’s numbers a bit, it is a sign that production is in deed on the rise and next months numbers will have a similar boost in both production as well as orders to restock the necessary parts.
Russell Price, a senior economist at Detroit’s Ameriprise Financial Inc. stated, “Manufacturing remains a bright spot for the economy,” later staying that there is “still a very sizable amount of pent-up demand in both the consumer and the corporate sectors.” According to Bloomberg Data, Price is seen to have been the best ISM index forecaster over the past two years.
Another plus for the recent manufacturing expansion stems from last week’s pledge from President Obama. He vowed to set $140 million in Federal funding, as well as $140 million in private funds to new high-tech manufacturing centers. The centers, located in Detroit and Chicago, plan to bring in companies, both profit and non-profit, as well as Universities to head the new technological research and development.
This is similar to what the White House did in both North Carolina and Ohio back in 2013. The Obama Administration plans on launching four more of these hubs before the turn of the year. This particular tech field is adding new jobs for the first time since the 1990’s. In the past four years more than 600,000 jobs have been created and with talks of more expansion, those numbers are set to increase.
Senior fellow of the Brookings Institution Mark Muro stated that, “The U.S. competitive advantage is clearly not going to be in low-end mass production. Where cost is the main driver, the U.S. can’t be the main player.” Muro claims that it is the advanced industries that are thriving because of the amount of time, money, research and development, as well as the top of the line employees that are heading these specific jobs.
Muro then said, in regard to these advanced industries, “Advanced industries are the ones that drive prosperity and have the best shot at surviving. Frankly, manufacturing that’s not innovative is likely in danger.”
With U.S. manufacturing expanding beyond projections and the recent news of Obama’s plans to fund new high-tech manufacturers, the U.S. appears to be heading towards growth within these industries and therefore more jobs and opportunities for the unemployed.
Commentary by Rich Peters
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