Manufacturing shows signs of life
By Dave Hannon -- Purchasing, 5/29/2009 11:14:00 AM
The news from the Commerce Department yesterday that orders for durable goods increased by nearly 2% in April added to a growing swell of extremely cautious optimism that the worst of the manufacturing slump may be abating in the U.S.
According to the Commerce Department, the 1.9% increase in durable goods orders marked the second jump in the past three months, as more companies burn through existing inventories. Orders for transportation goods were the highest, showing an increase of 5.4%. (For more information, see the Census Bureau’s report on April durable goods here.)
The durable goods data comes on the heels of the most recent
Manufacturer's Alliance/MAPI Quarterly U.S. Industrial Outlook
which forecasted a 2% increase in U.S. manufacturing for 2010.
Both the ISM PMI and Purchasingdata.com business conditions index have been showing en
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couraging signs in recent months, as well. Purchasingdata.com’s business conditions index rose to 43.4 in May, showing overall economic conditions in the U.S are getting closer to growth.
In Purchasingdata.com’s monthly survey, some buyers’ comments reflect the continuing uptick. While many still report business as “depressed” or slow, others are reporting some business improvements. A buyer in Minnesota reports that “things seem to have bottomed out” and another buyer in the chemicals sector says “we’ve seen some resumption in orders due mostly to Chinese stimulus plus inventories are now finally below acceptable levels for on-time service” which has stimulated some demand.
Regionally, there are pockets of manufacturing growth popping up in the U.S. This week, the Federal Reserve Bank of Kansas City said manufacturing activity in the 10th Federal Reserve District showed slight improvement in May, with expectations for a more stable future. About 32% of companies in the region said production was up in May.
And the latest Texas Manufacturing Outlook Survey from the Federal Reserve Bank of Dallas, said the manufacturing industry’s rate of decline in the region had stabilized in the past three months, prompting survey participants to predict a better second half of the year.
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