Please write a 250 words reviews of this article. Manufacturing Expands at Slowe
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Please write a 250 words reviews of this article.
Manufacturing Expands at Slower Rate in November
ISM says manufacturing index fell but remained solidly in growth mode
WASHINGTON—A gauge of U.S. manufacturing activity cooled modestly for the second straight month in November, but the reading still shows a strong factory sector.
The Institute for Supply Management on Friday said its manufacturing index fell to 58.2 in November, but remained solidly in a growth mode. A reading above 50 indicates activity is expanding across the factory sector, while a number below 50 signals contraction.
“It’s a really good performance,” said Timothy Fiore, head of the ISM survey. “Demand is coming from all sectors.”
Economists surveyed by The Wall Street Journal had expected a November reading of 58.0. The October level was 58.7. The September level of 60.8 was the highest for the index since May 2004.
The easing of the sector’s expansion last month was driven by a decrease in inventories and a slower rate of growth in deliveries from suppliers and export orders. Employment growth cooled just slightly.
But other components of the index show continued strength for manufacturing. Overall new orders are rising at faster rate, and production also sped up.
“This is typically the time of year where you see orders drop off and companies prepare for retooling,” Mr. Fiore said. “But we’re not seeing that. We’re seeing raw underlying demand.”
The latest data show the manufacturing sector is on a firm growth path heading into next year, now that factories have moved beyond distortions caused by hurricanes that struck the U.S. in last summer, he said.
Of the 18 manufacturing industries tracked, 14 grew last month, the report said. The machinery sector was particularly strong. Just two contracted; wood products and petroleum and coal products.
The ISM gauge is the latest measure showing solid growth for the manufacturing sector.
Orders for long-lasting durable goods, as tracked by the Commerce Department, are advancing this year at the best pace since 2014. That in part reflects stronger investment in equipment and machinery by U.S. businesses. The retrenching U.S. energy industry caused investment to slump in recent years. But as that sector bounced back, business confidence improved, and the global economy grew at a stronger rate in 2017, U.S. manufacturing has strengthened.
The survey showed raw-material prices for manufacturers advanced for the 21st straight month, though at a slower rate. The new data are consistent with other measures suggesting there may be inflation in the production pipeline. But so far it has been difficult for firms to fully pass those prices on to consumers.
The consumer-price index advanced 2% from a year earlier in October. Year-over-year price increases have eased since early this year. That could reflect that while the economy is growing and firms are adding jobs, wage gains have been soft, potentially limiting consumers ability to accept higher prices for goods.
Explanation / Answer
According to the aforementioned article, it is clear than industrial output is slower during November but shows signs of recovery. The manufacturing index was reported as 58.2 in November which means that the economy still has potential to bounce back in manufacturing sector. The manufacturing sector performed better in October than in November. The manufacturing sector performed its best in September since March 2004. The slowdown in the manufacturing sector was attributed due to shortfall of inventories and less import orders and supplies. Interestingly the study states that only 2 industries performed badly out of 18 industries in November. These are coal and petroleum and wooden industries. Machinery industries perforrmed quite better than other in the last month. Consumer demand is picking up especially for consumer durable goods. The survey also states that US energy sector which had been reeling under recession since 2014 has shown signs of recovery in this year which will create new investments and creates new jobs. Consumer price index also eased since this year which indicates increased purchasing power of consumers and decline in labour cost of the industries.