Manufacturing Industry on the Rise Despite Fiscal Cliff

Manufacturing Industry on the Rise Despite Fiscal Cliff

According to Reuters, the United States manufacturing industry ended on an upswing to end 2012.

Even with fears about the “fiscal cliff”, recent data illustrates a promising future for the industry deemed by Obama as, “(having) the potential to revolutionize the way we make almost everything.”

While many industries have seen a decline in almost all departments, the institute for Supply Management reported that, “U.S. factories returned to growth in December after contracting the previous month.”

Furthermore, the institute for Supply Management’s index of national factory activity rose in November, after experiencing a record low.

"What is interesting in this report is that you would think the negative headlines surrounding the fiscal cliff would have put pressure on manufacturing," said chief U.S. economist at RBC Capital Markets in New York, Tom Porcelli.

"With recent indications that growth is also picking up in other key economies around the world, notably in emerging markets such as China and Brazil, and that the euro zone's economic crisis is easing, U.S. companies should benefit as stronger demand lifts exports in early 2013," said Markit Chief Economist Chris Williamson.

Faster growth has been fueled by a sharp rise in new orders. One in five manufacturing companies reported an increase.

The growth in U.S. manufacturing has come in the face of fears late last year over the "fiscal cliff" of tax hikes and spending cuts, which would have commenced at the beginning of 2013. This created the risk of a  new U.S. recession.

However, lawmakers struck a deal in early January, avoiding income tax increases for most Americans while also delaying spending cuts for two months.

U.S. stock prices rose at the open on the congressional action, while yields on U.S. government debt rose.

Thomas Simons, vice president and money market economist at New York brokerage Jeffries, said in a note that, "now that Congress has come to an agreement. … We expect that new orders and overall activity in the sector will accelerate. However, we also expect that growth in the first quarter will be slow due to continued uncertainty over spending cuts and the debt ceiling,"

It is an exciting time to be in the manufacturing industry, especially as it thrives during uncertain fiscal times.




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