Manufacturing Industry Growth Continues in August
Although the United States Department of Labor’s Bureau of Labor Statistics reported the unemployment rate as “little changed” in August at 4.4%, not all industries saw lack of improvement in the latest Employment Situation Summary. In fact, manufacturing was a bright spot with job gains, having increased by 36,000 with increases in motor vehicle and parts, fabricated metal products, and computer and electronic product subsectors. With increases in July and having added 155,000 jobs since a low point last November, is the manufacturing industry set for continued growth?
Analysts seem to think so. The August increase in manufacturing numbers showed strong U.S. economic growth and caused U.S. Treasury yields to rise, even with little change in unemployment across the board. In addition, the Institute for Supply Management (ISM) reported an index of 58.8 for August, up from July’s 56.3, and the highest in over six years. That’s a significant improvement not only over July but also above ISM analysts’ prediction of 56.5 for August with the employment index and production index also up for the month.
While the Information Handling Services (HIS) Markit Purchasing Managers’ Index for August dropped below July’s 53.3 to 52.8, analysts saw manufacturing production rise modestly and the strongest employment increases in six months. And while these most recent numbers don’t account for the damage Hurricane Harvey brought nor for the tropical storm’s ensuing cleanup, manufacturers are also generally optimistic.
Hurricane Harvey impact
Those hardest hit by Harvey in the southern U.S. include chemical and petrochemical plants along the Gulf Coast. Last week, approximately 40% “of the U.S. petrochemicals market was offline as of Tuesday morning” as the storm hit oil refineries and chemical plants. With ports also closed throughout the storm, it’s been difficult or impossible to transport raw materials. But as employees attempt to return to work following the Labor Day holiday, some roads are still submerged, limiting access as leaders attempt to get their plants back online following the catastrophic hurricane.
But as cleanup continues, reconstruction is likely to support the industry as manufacturers produce many necessary building materials. And with employment on the rise and analytics looking up, manufacturing appears ripe for growth — even during a difficult time for many in the southern U.S.