The manufacturing industry is hitting its stride in recent years — both benefiting from and driving the economic recovery. Coming off a solid 2014, manufacturers are confident that the wind is finally at their backs. Based on early indicators, 2015 is shaping up to be yet another strong year for this industry. Here are four key indicators supporting this assumption:
1. Consumers are Buying More
The buyer is back. Consumer confidence is ticking upward, and it’s being reflected in the amount of money consumers are willing to spend. In fact, the fourth quarter of 2014 saw consumer spending hit levels it hasn’t seen in nearly a decade. This is partly the result of record-low fuel costs and an unemployment rate that saw continuous sharp drops. Consumers are finally getting comfortable spending their discretionary money instead of hiding it away in fear of another economic slump.
As a result of more consumer spending, production is up. Despite some dire predictions early on, GDP grew by 2.4 percent. Compare that with European GDP growth — which hovered just below half a percent the same year — and it paints a rosy picture for domestic manufacturers. If this trend continues, and it likely will, the manufacturing industry will have a good 2015.
2. Orders for ‘Long-Lasting’ Goods Remain High
In addition to smaller consumer spending, orders for long-lasting goods remain high. That indicates that both consumers and businesses across the board are confident enough to increase spending – it’s another promising sign for manufacturing in 2015.
3. Manufacturers are Investing Again
Manufacturing companies spent much of the previous decade in hunker-down mode — the winds were against them, and the crippling recession forced them to run bare-bones operations with almost no new investments to speak of. In the last four or five years, that has changed. Various circumstances have driven a “Made in the USA” revolution, and the manufacturers who learned to survive tough times are now leading the way in investing. After a long drought, manufacturers are retrofitting equipment, buying new tools, upgrading facilities to be more efficient and meet greater demands. Investment is almost always an indicator of confidence. And for an industry as shell-shocked as manufacturing once was, it’s a big deal.
4. Factory Jobs are Coming Home
Compared with the rest of the world, the U.S. job market is booming again. The last year closed out with a near-normal unemployment rate of 5.6 percent, and the manufacturing industry deserves a share of the credit for the turnaround. Kiplinger predicts the unemployment rate to stay low and to possibly tick lower by the end of the year at 5.3 percent. Companies are changing their minds about the benefits of overseas production, and they’re increasingly willing to manufacture locally. It’s a trend that has been developing over several years, so it’s likely to continue into 2015 and beyond.
In summary, manufacturers have learned to be lean and survive tough times, and it’s a skill that is helping them flourish as the economy at large picks up steam this year.