Manufacturing sector gains momentum
GDA Staff -- Gifts & Dec, April 8, 2002
In one more compelling sign that the U.S. manufacturing economy continues its recovery, the overall sector improved for a second straight month, providing a strong finish to the first quarter, according to the Purchasing Managers' Index.
"The March report certainly validates the turnaround for manufacturing," said Norbert Ore, chairman of the Institute for Supply Management's Business Survey Committee, which compiles the monthly barometer of manufacturing activity.
While growth in production trailed off somewhat during March, "new orders rose to a very lofty level, in fact, reaching a level last seen in October 1986," said Ore.
Textiles, Ore noted, was one of the 15 out of 20 manufacturing sectors reporting growth during the month, along with another home-related business, furniture, and the related apparel business.
Among commodity industries, said Ore, textiles, like the primary metals industry, has been particularly hard hit during the recent economic turndown, and may now be poised for a turn-around moving into the second quarter.
"Manufacturing has struggled for many months, and industries like primary metals and textiles have been through a devastating period," said Ore. "Overall growth for the first quarter is stronger than predicted and capable of providing a basis for continuing recovery."
Up until now, said Ore, "the economy has benefited from low energy prices, low inventories and low interest rates." But now consumer demand is going to have to take over to drive further gains in manufacturing, he thinks. "Now it appears that energy prices are rising, [that] we have reached the end of the inventory liquidation, and interest rates will certainly rise. The capital investment tax credit will help, but ultimately consumers will need to re-establish themselves as the major driver."
In a particularly hopeful note for the manufacturing sector, the New Orders Index advanced in March to a reading of 65.3, up 2.5 percentage points from the 62.8 reading recorded in February. Making its first appearance in many months on the list of gainers in new orders is the textiles industry.
And textiles gained again in terms of production, even though the broad manufacturing sector tapered off to a reading of 57.8 from 61.2.
Order backlogs increased as well, as they did for the overall manufacturing sector — the Order Backlog Index jumped up to 62.5 from a reading of 53.0 in February.
Textiles recorded growth in new export orders as well, even though the overall manufacturing sector slipped slightly, to a reading of 51.0 from a February level of 51.1
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