The Chicago Federal Reserve Bank said that manufacturing activity in its District rose 0.8 percent in February, its fourth consecutive monthly gain. Unlike past months, the main driver for the Midwest Manufacturing Index was not the automotive sector.
The all-important motor vehicle segment had a slight 0.1 percent decline in activity in the month, but this followed extremely healthy increases of 2.3 percent and 1.9 percent in December and January, respectively. In addition, year-over-year increases in auto production for this region were 12.4 percent.
In contrast to autos, the other major sectors reported increases in activity in February. Output in the machinery and steel sectors led the pack, with increases of 1.7 percent and 1.6 percent, respectively. This was followed by a 0.5 percent uptick in “resource” production. Components of the resources sector, according to the Chicago Fed, include food, wood products, paper, chemicals, and nonmetallic mineral products. Each of these three sectors had soft output numbers in January, with steel and machinery production down and resource activity flat that month.
In general, Midwestern manufacturing activity has been stronger than what we have seen in many other regions around the country, with auto production helping to provide the largest boost, as described earlier. Over the past 12 months, manufacturing output has risen 5.9 percent, and over the past 24 months, production is up 16.6 percent.
As such, manufacturing activity has rebounded strongly in these states, with Michigan continuing to have the fastest manufacturing job growth of any state in the country (with over 88,000 since the end of 2009). Other states in the Midwest also have had a strong performance thanks largely to this revival.
Chad Moutray is chief economist, National Association of Manufacturers.