US Factory Output Rebound in the 4th Quarter

Published on: December 27, 2019

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The end of the General Motors Co. strike leads to the stabilization of the manufacturing industry. This increase in the output of the manufacturing industry in beyond the surge of the auto section of the manufacturing industry. With a 1.1% gain, this is the highest lead since 2018, despite the 0.7% decrease that was experienced in October. This is based on the data from the Federal Reserve. With an increase of 12.4% in the auto sector, which is the highest in the last 10 years. All leading to a 0.3% increase in output of the industry.

The increase in output is well received by manufacturers who have experienced a turbulent period due to the inconsistent trade policy which have further depleted demands in recent months. In essence, things could get better for the manufacturing industry in 2020 if the proposed trade agreement between the US and China pulls through. This will further improve confidence in the market and help to build on the current momentum of trade.

According to a survey by the Federal Reserve Bank of New York, orders for manufacturers is at it highest since February. Which is why the Institute for Supply Management’s national factory index has predicted a four-month contraction for the industry. Aside the auto sector, other sector that have experienced gains include; primary metals, processing equipment, food and tobacco. However, electronic, chemical and clothing experienced a decline. The economic growth is amidst the spending in consumer spending that is expected to be lowered.

Another sector that is experiencing growth is the construction of new homes in the US. The growth was at it highest in November, which is at a 12-time highest. Capacity utilization also moved to 77.3% to 76.6%. It should be noted that the Federal Monthly Data is quite volatile but that does not stop the growth of the manufacturing industry. It should be noted that he manufacturing industry makes up three-quarter of the total industrial production, this is around 11% of the US economy.

Pickert, Reade. “U.S. Factory Output Rebounds Even without Post-GM Strike Bump.” SFChronicle.com, Washington Post, 17 Dec. 2019, https://www.sfchronicle.com/business/article/U-S-factory-output-rebounds-even-without-Post-GM-14912587.php.
Williamson, Chris. “US Manufacturing Output Rebounds, Confirming IHS Markit PMI Signal.” IHS Markit, 18 Dec. 2019, https://ihsmarkit.com/research-analysis/us-manu-output-rebounds-confirming-ihs-markit-pmi-Dec19.html.

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