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National outlook for manufacturing looks good in 2015

Posted by Gino DiCaro, VP, Communications on Jan. 23, 2015

This week the National Association of Manufacturers (NAM) held their quarterly manufacturing update with their chief economist Chad Moutray. The national picture is definitely improving. Here are some of the highlights:

The Purchasing Managers Index showed U.S. expansion in 2014 (with a slight momentary decline in December).

Manufacturing's Gross Domestic Product grew by 2.4 percent in 2014. Expected growth in 2015 is 3.2 percent.

NAM's survey shows manufacturers are more upbeat on sales, investment and employment.

The four top policies manufacturers would like addressed:

  • Reduce regulatory burden – 82.8 percent
  • Slow entitlement spending – 79.2 percent
  • Pass comprehensive tax reform – 74.0 percent
  • Control healthcare costs – 73.7 percent

Eight of the top ten U.S. export markets are expanding. China and South Korea are not.

There has been sluggish growth in U.S. exports over the last two years but this looks to be improving.

Labor market is improving. 15,000 new manufacturing workers per month last year. We need to keep up that pace. We still have too much part-time and under employment.

The largest manufacturing growth sectors were transportation equipment, machinery, fabricated metals, non metallic minerals, and chemical industries.

The regions showing the most manufacturing growth are the Midwest, primarily Indiana, and the Southwest, primarily Texas.

Our housing market index is improving.

With the lack of inflation and other dynamics, the Federal Reserve will likely stop its “quantitative easing” in the middle of 2015 and interest rates will rise.

The nation's downside future risks included:

  • The global economy (slowing growth in China, sluggish growth in Europe and continued weakness in South America)
  • Labor market volatility
  • Higher interest rates
  • The overall political environment
  • The country’s strengthening dollar can also be a potential challenge for manufacturers

In times like these, California must take advantage of every opportunity to grow its manufacturing base beyond its 1.2 million workers. The sector is the foundation of our economy and the gateway to opportunities for our middle class. Domestic competitiveness to attract manufacturing investment should be our priority. (See LA Times on this issue this week)


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