“Manufacturers have benefited from pro-growth policies, including tax and regulatory reform, as well as pent-up demand globally…”
The Bureau of Economic Analysis said that the U.S. economy grew by an annualized 4.1 percent in the second quarter of 2018, the best reading since the third quarter of 2014 and up from 2.2 percent growth in the first quarter. Robust growth in consumer and business spending and exports boosted the data. Since the end of the Great Recession, the U.S. economy has expanded 2.2 percent on average. Moving forward, real GDP should grow by roughly 3 percent in 2018, which would be the strongest growth rate since 2005.
Indeed, over the past six months, tax reform and regulatory relief have sparked the robust manufacturing job growth manufacturers predicted. The business optimism of our member companies stands at a record high, and 86 percent of them plan to invest in new plants and equipment, 77 percent plan to increase hiring, and 72 percent plan to increase wages and benefits for workers. That is driving the robust growth we are now seeing reflected in today’s report, placing an urgent need to grow and upskill the manufacturing workforce. Read More
“Manufacturing gross output increased from $6.228 trillion in the fourth quarter to $6.347 trillion in the first quarter, a new all-time high.”
The Federal Reserve reported that manufacturing production rebounded strongly in June after pulling back in May due to a fire at an auto supplier. Output in the sector increased 0.8 percent in June after falling 1.0 percent in May. So far in 2018, manufacturing production has seesawed from month to month, but up 1.0 percent over that time frame. Over the past 12 months, production in the sector has risen a respectable 1.9 percent, up from 1.7 percent in the previous release. My forecast for 2018 is for manufacturing production to increase 2.2 percent, which would indicate an uptick in output in the second half of this year. Similarly, manufacturing capacity utilization rose from 75.0 percent in May to 75.5 percent in June, which remains not far from April’s rate (75.8 percent), which was the best reading since August 2015.
In June, durable and nondurable goods manufacturing increased 1.6 percent and 0.1 percent, respectively. The largest increase came from motor vehicles and parts, which soared by 7.8 percent in June after dropping by 8.6 percent in May. Beyond automotive, other manufacturing sectors with increased production for the month included computer and electronic products (up 1.5 percent), wood products (up 1.2 percent), aerospace and miscellaneous transportation equipment (up 1.0 percent), fabricated metal products (up 0.9 percent), textile and product mills (up 0.9 percent), machinery (up 0.7 percent) and petroleum and coal products (up 0.6 percent), among others.
In contrast, output declined for apparel and leather (down 3.1 percent), nonmetallic mineral products (down 1.1 percent), furniture and related products (down 0.5 percent), miscellaneous durable goods (down 0.5 percent), plastics and rubber products (down 0.3 percent) and food, beverage and tobacco products (down 0.2 percent).
Meanwhile, total industrial production also recovered in June, up 0.6 percent after declining 0.5 percent in May. Mining output increased 1.2 percent in June, but utilities production fell 1.5 percent. Over the past 12 months, industrial production has risen 3.8 percent, up from 3.2 percent in the prior release and the fastest year-over-year pace since July 2014. Mining and utilities have grown 12.9 percent and 5.0 percent year-over-year, respectively. In addition, capacity utilization ticked up from 77.7 percent to 78.0 percent. That was just shy of the 78.2 percent reading in April, which was the best rate since February 2015.