Manufacturing Forecast: Partly to Mostly Sunny


“Polar vortex” was the trending term this past winter. But even as the meteorological catch phrase burned up the Twitter feeds, its frigid weather iced up the Purchasing Managers Index (PMI) and other indexes. Manufacturing was slowed by the record cold. Despite that, though, the current data has most business sectors either sitting pretty or on an uptick.

U.S. economic growth in the second half of 2014 will be better than in the first half, averaging 1.8% during the first two quarters of the year and 2.6% in the latter two quarters, according to IHS Global Insight. “The manufacturing outlook for 2014 and 2015 calls for about a percentage point acceleration in the growth rate each year,” says Daniel J. Meckstroth, Ph.D., vice president and chief economist of the Manufacturers Alliance for Productivity and Innovation (MAPI). Business investment-driven manufacturing, says MAPI’s latest outlook, is the primary driver of the production growth.

“Firms have a lot of cash,” Meckstroth notes. “They are profitable and have relatively high utilization rates. Importantly, the two-year federal budget and debt ceiling agreement substantially reduced uncertainty. And now that the Eurozone has come out of recession and emerging markets seem more resilient, export activity should pick up and provide a boost to business sentiment.”

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By Amy Drew Thompson