“As manufacturers realize what can be achieved with technology such as AI, IoT, robotics, and additive manufacturing, they are sourcing manufacturing closer to the customer to create a customer experience advantage (rapid customization and delivery) with a lower cost base” points out Lisa Anderson, president of Claremont, CA-based LMA Consulting Group, Inc. and president of LMA Consulting Group, Inc., Claremont, CA.

US manufacturing recovered slightly in January but isn’t out of the woods

Dive Brief:

  • The U.S. manufacturing sector showed signs of life in January, with the Institute for Supply Management’s purchasing manager’s index (PMI) rising from 47.8% in December 2019 to 50.9% last month. A reading above 50% marks sector expansion, while a reading under 50% signals contraction. 
  • “Rising demand from households has helped support production in recent months, but January saw a marked slowing in new orders for consumer goods,” Chris Williamson, chief business economist at IHS Markit ​said in a statement. “Production of capital goods such as business equipment, plant and machinery meanwhile fell for the first time in almost four years, hinting at weakened business investment.”
  • In 18 of the manufacturing sub-sectors ISM tracks, eight reported seeing some growth in January, namely consumer electronics, furniture, food and beverage, and tobacco products. Eight saw a contraction including apparel, leather and allied products; textile mills; electrical equipment, appliances and components; and petroleum and coal products.

Dive Insight:

January marked the first month of expansion since July 2019, however, the manufacturing sector isn’t out of the woods just yet.

“US manufacturing limped into 2020, with falling exports dampening output growth and causing a pull-back in hiring,” Williamson said. “The survey data are consistent with factory production falling moderately, meaning the manufacturing sector looks set to act as a drag on the overall economy once again in the first quarter.”

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Published in Supply Chain Dive on Feb. 3, 2020