Last week, President Donald Trump met with manufacturing CEOs at the White House to discuss policies that will make the sector more competitive globally. The focus on pro-growth policies by the new administration—even with lingering uncertainties—has helped to lift both consumer and business confidence to multiyear records.
While we have seen improved sentiment lately, it is clear that manufacturers struggled mightily over the past two years to increase international demand, particularly with a strong U.S. dollar and lingering economic challenges to key markets.
The Institute for Supply Management’s Manufacturing Purchasing Managers’ Index continued to grow rather strongly, accelerating to its fastest pace since November 2014. The composite index rose from 54.5 in December to 56.0 in January, marking the fifth straight monthly expansion in the headline number. New orders and production grew strongly in January.
The Bureau of Economic Analysis reported that the U.S. economy grew 1.9 percent at the annual rate in the fourth quarter in preliminary data. This was slightly less than the consensus estimate of 2.2 percent, and it was slower than the 3.5 percent increase in the third quarter.
The Federal Reserve reported that manufacturing production rebounded in December after pulling lower in November, with output in the sector up 0.2 percent in the latest release. Manufacturers have struggled to increase demand over the past couple years, with a strong dollar and global headwinds dampening overall activity, but recent data have started to reflect a turnaround in sentiment.