Manufacturing was one of few bright spots for the economy in 2010, and it's expected to be much of the same story this year. However, while results were still positive, market-watchers got a surprise Thursday when an index tracking the sector actually declined from December.
The Federal Reserve Bank of Philadelphia's January 2011 Business Outlook Survey, generally seen as somewhat of a bellwether indicator for manufacturing, predicted the sector will remain in a growth mode for much, if not all, of 2011. However, it was notable and somewhat unsettling that the survey's future general activity index fell five points, to 49.8 from 55.4 in January. Similarly, the indexes for future new orders and shipments "remained at relatively high levels but also declined, falling 7 and 3 points, respectively."
Still, Philly's Fed branch assured that indicators such as long-term demand, new orders and shipments, among others, point to continued manufacturing growth. And though the index declines raised a few eyebrows, the Fed maintained "firms remain quite confident that an expansion of manufacturing activity will continue through the first half of the year."
Brian Shappell, NACM staff writer