Manufacturing: Enough is Enough
- January 9, 2012
The world is tired of the endless negative news about manufacturing and despite the ongoing economic upheaval in Europe, the global economy is saying "enough is enough and it’s time to move on.”
At least that’s what seems to be the case based on the data now emerging from some countries.
In North America, recent economic data points to a resurgence in manufacturing. Two indicators - The Institute for Supply Management’s (ISM) manufacturing index in the US and RBC’s Purchasing Managers Index in Canada show increases in manufacturing activity in December.
ISM’s PMI increased 1.2 per cent from the 52.7 per cent reading in November to 53.9 per cent in December. Released January 6, 2012, the institute’s "Manufacturing ISM Report on Business” points to better times for manufacturing in 2012, notes Bradley J. Holcomb, who chairs the ISM’s Manufacturing Business Survey Committee. "Manufacturing is finishing out the year on a positive note, with new orders, production and employment all growing in December at faster rates than in November, and with an optimistic view toward the beginning of 2012 as reflected by the panel in this month's survey."
In Canada, RBC released the results of its Canadian Manufacturing PMI’s index for December shows "manufacturing activity not only continues to grow but also that the pace of growth picked up in the month [December] following two months of slowing activity (PMI rose from 53.3 in November to 54.0 in December).”
In further good news about manufacturing, employment figures from Statistics Canada, showed an increase, rising 17,500 and "the strength in employment in Ontario was almost solely the result of a rebound in manufacturing employment. About one half of the national increase of 30,400 occurred in Ontario,” notes Paul Ferley, assistant chief economist for RBC Economics, commenting on the data.
What’s happening in North American is a stark contrast to the ongoing economic uncertainty in Europe.
And the jury is still out on how resistant North America’s manufacturing industry can be against the backdrop of struggling European countries. The Economists’ "Misery Index” notes two indicators of "economic gloom” continue to persist - unemployment and inflation. "One striking feature of the updated index…is that high unemployment now places a number of rich European countries right up there with the most miserable countries in the world - or at least in the 92 for which we have good data.”
North America’s manufacturing industry seems to be turning the corner, but no one can determine the sustainability of this industry. For now, we can enjoy the positive data emerging and hope that indicators in the coming month continue to point to sustainable growth in manufacturing.