January 3, 2012

January 3, 2012

As we bring in a new year, it is clear that the U.S. economy is on a stronger footing than it was just a few months ago. Recent data suggest improvements in a number of manufacturing production indicators, providing some momentum leading into 2012. With that said, there remain some significant headwinds as well, with a weak domestic employment and housing market and continued anxieties in Europe. Real GDP should grow by at least 2.6 percent this year – stronger than the 1.5 percent growth of 2011 – but this rate of growth is still not enough to bring down the unemployment rate in a major way, and businesses and the public remain wary overall (even as they have become more optimistic recently).

Data released last week tended to support this view, showing both progress and mixed news. The Conference Board's Consumer Confidence Index in December jumped to its highest level since April, mirroring similar rises in confidence observed in other surveys. Consumer sentiment, in particular, tends to closely follow pocketbook issues, and Americans have become more positive about their own income and job prospects. Still, these indices remain sub-par overall despite their recent moves upward, reflecting the many economic anxieties that persist in the marketplace.

Manufacturers have also become more optimistic, though different regions are showing varying degrees of positivity. The four regional manufacturing surveys released last week provided mixed updates on production activity for December. The Chicago region remains one of the strongest in the nation, with the ISM-Chicago reflecting strong expansions in manufacturing activity. Respondents to the Dallas, Kansas City and Richmond Federal Reserve Bank surveys were less upbeat, with some reporting modest improvements while others observed a slight contraction. The longer-term view, however, for all of these surveys is upbeat. In looking at the expectations components from these surveys for the next six months, manufacturers nationwide anticipate healthy increases in new orders, production, employment and capital spending.

This week, we should receive similar information from the latest ISM purchasing managers' index data, which will be released this morning. I would anticipate a modest improvement in December from the 52.7 reading of November based on other recent data. In addition, the other major release of the week will be new employment data from the Bureau of Labor Statistics. Last month, many of us were surprised by the drop in unemployment from 9.0 percent to 8.6 percent. Some of this fall was the result of an increase in discouraged workers. Last week, there was an increase in weekly jobless claims, suggesting that at least some of these individuals have come back into the labor force to start looking for jobs. As a result, economists will be closely watching the unemployment rate and nonfarm payroll numbers to gauge whether or not there will be improvements. I expect a slight increase in the unemployment rate with nonfarm and manufacturing jobs increasing modestly for the month.

Chad Moutray
Chief Economist
National Association of Manufacturers

ST. GEORGE COMPANY MANUFACTURES UNCLOGGING SURGICAL DEVICE

Utah Business
Ontium Medical, has selected St. George, UT as the primary location for its new manufacturing site. The manufacturing facility, located in the Ft.
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UTAH WORKERS' COMPENSATION RATE INCREASES FOR 2012
Utah Business
Utah small businesses should prepare for workers’ compensation insurance rate increases going into effect after the New Year. The Utah Division of Insurance has ordered an average premium rate increase of 1.5 percent effective January 1, 2012.
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UTAH HOME SALES UP FOR SIXTH STRAIGHT MONTH
Utah Business
Utah home sales continued an upward trend in November, rising more than 10 percent compared to last year and marking the sixth straight month of home sales increases, according to a new report from the Utah Association of Realtors. During November, Utah Realtors sold 2,523 homes, townhomes and condominiums versus 2,285 sold last year during the same month. Sales were also up for the year as a whole, rising 8 percent compared to the January-through-November period in 2010.
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MANAGING HEALTH CARE REFORM DECISION MAKING
Quick Manufacturing News
The health insurance exchanges are coming on line and companies must make the so called 'pay-or-play' decision in just 24 months. Is it better for the company to continue to offer its employees health insurance (play)? Or is it more advantageous to eliminate health benefits and pay the resulting penalties (pay)? Click to continue

FUELS TAKE TOP US EXPORT SPOT FROM AIRCRAFT
Today in Manufacturing
Just how big of a shift is this? A decade ago, fuel wasn't even among the top 25 exports. And for the last five years, America's top export was aircraft ... continue

WHIRLPOOL ACCUSES LG AND SAMSUNG OF 'DUMPING' WASHERS
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Whirlpool filed legal action against South Korean rivals LG and Samsung, saying they dumped underpriced washing machines into the U.S. market in violation of trade laws. Click to continue

WIND TOWER MANUFACTURERS SEEK IMPORT RELIEF
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A coalition of U.S. manufacturers of welded steel towers is alleging in a trade complaint that producers in China and Vietnam are benefiting from their governments' subsidies, allowing them to sell wind towers below cost and undermining the fair market rate. Click to continue

EUROZONE MANUFACTURING STUCK IN REVERSE
Quick Manufacturing News
The Eurozone manufacturing sector was in reverse for the fifth month in a row in December, a key survey showed on Jan. 2. Click to continue

UPTICK IN MANUFACTURING OUTPUT IN INDIA
Quick Manufacturing News
India's factory activity showed its sharpest rise in six months in December, helped by improved demand and growth in new orders for business, according to a new survey. Click to continue

MANUFACTURING GROWS AT FASTEST PACE IN 6 MONTHS
Today in Manufacturing
The Institute for Supply Management says factories hired in December at the fastest pace since June, and should start the new year strongly ... continue

REPORT: EQUIPMENT INVESTMENT TO GROW 9 PCT. IN 2012
Today in Manufacturing
The macro outlook for 2012 is for a slow improvement, with more positive cyclical trends kicking in later in the year ... continue

AUTO INDUSTRY TO POST ANOTHER GOOD SALES YEAR
Today in Manufacturing
After hitting a 30-year low in 2009, U.S. auto sales are poised for a second straight year of growth thanks to pent-up demand ... continue

FACTORIES, BUILDERS BOOST ECONOMY AT END OF YEAR
Today in Manufacturing
Factories hired more workers in December, while U.S. builders spent more in November on single-family homes, apartments and remodeling projects ... continue