Industry Week’s January 29, 2018 edition featured an article “State of the Economy: January 2018”. The article uses big picture macro economic statistics, which show optimistic news. It begins with this:
“We are off to a positive, yet demure start to 2018. Leading economies are exhibiting slower, but stable growth and the U.S. has followed a similar trend with many manufacturing companies excited for growth due to new tax laws. The cyclical upswing that is underway since mid-2016 has continued to strengthen. Some 120 economies, accounting for three quarters of world GDP, have seen a pickup in growth in year-on-year terms throughout 2017.”
The article reports 3Q 2017 growth higher than projected in most major advanced economies, and “key emerging market and developing economies also posted 3Q growth stronger than the fall forecasts. “For the two-year forecast horizon, the upward revisions to the global outlook result mainly from advanced economies where growth is now expected to exceed 2% in 2018 and 2019. This forecast reflects the expectation that favorable global financial conditions and strong sentiment will help maintain the recent acceleration in demand.” “Acceleration in demand” sounds like good news for us in manufacturing!
“Manufacturing activity in December reached all-time highs in a number of markets, including Austria, Germany, and Ireland. In addition, the headline index was at or near a 17-year high in both France and the Netherlands, and Greek manufacturers cited their strongest conditions since June 2008. Beyond those markets, manufacturing activity remained strong despite decelerating at year’s end from multiyear highs in the November survey” in several other European markets.
And here’s the Chinese story: “The Chinese economy grew 6.8% year-over-year in the third quarter, edging down slightly from 6.9% in the first and second quarters. Industrial production has decelerated over the past few months, down from 6.6% year-over-year in September, to 6.2% in October, to 6.1% in November. (Just imagine what 6.2% US growth would do to your demand!!) Similar trends have occurred for fixed asset investment, which has slowed to 7.2% in November, and for retail sales, which have eased to 10.2% in November. With that said, retail spending picked up slightly in the latest release, up from 10.0% year-over-year in October.”
And finally, the US situation:
“In the U.S., real GDP grew 3.2% in the third quarter, boosted by strength in consumer and business spending and net exports and extending the 3.1% gain in the second quarter. Manufacturing added 0.24 percentage points to top-line growth in the third quarter, with mixed results for the sector. Real value-added output grew 2.0% for manufacturers in the third quarter, buoyed by a 7.5% growth rate for durable goods firms but weighed down by a 4.1% decline for nondurable goods businesses. Recent hurricanes hit the latter hard, especially in chemical and energy markets.”
“Overall, manufacturing gross output increased to $6.031 trillion in the third quarter, rising to its highest point since the fourth quarter of 2014. Those findings closely mirrored the value-added data for manufacturing, which rose to $2.252 trillion in the third quarter, another new all-time high. Value-added output for durable goods increased to $1.224 trillion, with nondurable goods value-added output rising to $1.028 trillion.”
“The bottom line is that manufacturing accounted for 11.5% of real GDP in the third quarter, which remained the same from the prior report. Adjusting for inflation, there was also a new all-time high for real value-added output in manufacturing, up to $1.958 trillion in the third quarter. Those figures are in chained 2009 dollars, and the latest number edged out the previous peak of $1.955 trillion recorded in the third quarter of 2007, or just before the start of the Great Recession.”
The conclusion of this article: “It seems we are off to a positive, yet demure start to 2018. Leading economies are exhibiting slower, but stable growth and the U.S. has followed a similar trend with many manufacturing companies excited for growth due to new tax laws. According to the IMF, growth is on the horizon, but we may have a while still to go before noting any spectacular upswings.”
We hope you al are enjoying growth this year. If so, you may need candidates for your outsourced manufacturing needs, which we would be very pleased to provide! Just give us a call. We are ready when you are.