05262018Sat
Last updateThu, 24 May 2018 2pm

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IHS: Manufacturing at Strongest Level Since Sept. 2014

The seasonally adjusted IHS Markit Flash U.S. Manufacturing PMI registered 56.6 in May, up fractionally from 56.5 in April, to signal the strongest improvement in business conditions since September 2014. May data revealed relatively strong rises in both manufacturing production and incoming new business, which survey respondents attributed to improving economic conditions and a continued recovery in domestic sales.

There were signs that manufacturers intend to boost production schedules in the coming months. Backlogs of work were accumulated at the strongest pace since September 2015 and payroll numbers increased to a greater extent than in the previous month. Moreover, business optimism regarding the year ahead outlook was the highest since February 2015. 


Philly Fed: Manufacturing Activity Up in May Survey

The Philadelphia Fed’s monthly survey indicate a pickup in growth for the region’s manufacturing sector. The indexes for general activity, new orders, shipments, and employment all improved from their readings last month. The indexes for prices paid and received continued to suggest price pressures. Looking ahead six months, the firms continued to be optimistic about the outlook for manufacturing activity.

Over 43% of the manufacturers reported increases in overall activity this month, while 9% reported decreases. Both current new orders and shipments indexes improved this month, increasing 22 points and 2 points, respectively. 

Manufacturers Are Boosting Hiring, Wages and Investment

A new survey from the National Association of Manufacturers (NAM) shows that manufacturers are keeping their promise after passage of the historic tax reform legislation by boosting wages, hiring and investment. The survey, released by Emerson chairman and CEO and NAM board chair David Farr during a House Ways and Means Committee hearing, shows 72% of manufacturers are increasing employee wages or benefits, 77% are hiring more workers and 86% are investing in new equipment and facilities. Last month, the NAM’s Manufacturers’ Outlook Survey found optimism among manufacturers registered the second-highest level ever recorded (93.5%) in the 20-year history of the survey. 

Leading Economic Indicators Up 0.4% in April

The Conference Board Leading Economic Index (LEI) for the U.S. increased 0.4% in April to 109.4, following a 0.4% increase in March, and a 0.7% increase in February.

April’s increase and continued uptrend in the U.S. LEI suggest solid growth should continue in the second half of 2018. However, the LEI’s six-month growth rate has recently moderated somewhat, suggesting growth is unlikely to strongly accelerate,” said Ataman Ozyildirim, director of business cycles and growth research at The Conference Board. “In April, stock prices and housing permits were the only negative contributors, whereas the labor market components, which made negative contributions in March, improved.” 

U.S. Factory Output Rose in April

Industrial production rose 0.7% in April for its third consecutive monthly increase. The rates of change for industrial production for previous months were revised downward, on net; for the first quarter, output is now reported to have advanced 2.3% at an annual rate.

Manufacturing output moved up 0.5% in April; for the first quarter, the index registered a downwardly revised increase of 1.4% at an annual rate. In April, the indexes for durables and nondurables each gained about 1/2%, while the production of other manufacturing industries rose nearly 1%. 

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