Manufacturing in the U.S. has expanded at a faster pace than originally projected for February. In January, The Institute for Supply Management’s manufacturing index rose from 51.3 in January to 53.2. Additional figure showed consumer spending climbed more than expected in January. Additional estimates may have been low because of considering home heating bill and households enrolling in the Affordable Care Act.
This pickup in manufacturing may have been even stronger if not for a slight slump in production. The slump was due to a shortage of parts, but this means orders will improve directly, after stockpiles are replenished. Senior economist at Ameriprise Financial Inc., Russell Price states that “manufacturing remains a bright spot for the economy…there’s still a sizable amount of pent-up demand in the consumer and corporate sectors.”
As far as the Global manufacturing goes, things are mixed. China had a couple factories decline in February and the index from the HSBC showed a seven-month low. In Europe, manufacturing was higher than previously estimated. France had a seven-month high in manufacturing and the index in the euro region rose significantly.
In the U.S., manufacturing accounts for 12 percent of the economy. Production has recently been slowed because of inclement weather throughout the country, but should pick up with a high demand for backlogs. Bradley Holcomb, the chairman of the Institute for Supply Management conducted a survey that indicated there was “pretty broad-based optimism” in regard to future orders. Additionally consumer spending has increased more than expected for January. Purchases account for nearly 70 percent of the economy and this also rose.
Specifically, there has been more spending on construction projects, according to the Commerce Department. This marks a housing rebound with home renovating chains like Home Depot and Lowes showing higher sales. Once the harsh winter weather subsides we may feel the full effect of less fiscal restraint and progress in the job market that will boost the GDP.