EarningsCenter

Factory worker in U.S. manufacturing plantWith growing instability in the Middle East and divisive union conflicts taking shape in America's state capitals, investors are desperate for some good news. That's why the U.S. manufacturing sector is a sight for sore eyes: After more than a year of expansion, it's still growing, as American factories continue to churn out the equipment, machines and products that emerging-market nations need to develop their infrastructures.

But it's not all wine and roses in manufacturing. One of the most comprehensive reports recently offered a lukewarm assessment of the sector. According to the U.S. Federal Reserve, industrial production unexpectedly fell 0.1% in January; economists had expected an 0.5% rise. But even this bad news was mitigated by the fact that the production dip was concentrated in utilities and mining, while production in manufacturing actually rose 0.3%.

ISM Factory Index at Nearly Seven-Year High


The Institute for Supply Management's February manufacturing index left no doubt concerning the status of the industrial rebound. Aided by increasing strength in exports, manufacturing grew at a faster rate last month, with the index hitting 61.4, its highest level in about seven years. It was also 19th consecutive month of expansion.

In fact, every key index component except one rose in February. The closely watched new-orders component -- a gauge of future business demand -- rose to 68 from 67.8, after jumping 5.8 points in January. At the same time, employment and production components also increased, with each component continuing to signal an expansion.

Even the bad news had a silver lining: Although the inventories component fell from 52.4 to 48.8 in February, the decline amid rising orders suggests that supply-chain inventories are being drawn down. They will, of course, need to be replenished, which is good news for manufacturing employment growth in the immediate quarters ahead.

When it came to jobs, things also looked up in February. According to ADP's Private Payroll report, February was the fourth straight month in which manufacturers added jobs. With the addition of 20,000 jobs, manufacturing has added 92,000 people payrolls since October 2010.

Philly Fed Survey: Factory Hiring Ahead

The Federal Reserve Bank of Philadelphia's regional economic survey, commonly known as the Philly Fed survey, was also optimistic. In February, its regional manufacturing index skyrocketed from 19.3 to 35.9, exploding past the 22 that Bloomberg estimated. Beyond the good news for the Philly Fed region, this also bodes well for manufacturing in general, demonstrating that the expansion is not just Midwest-based or U.S. auto sector-based, but far more wide-reaching.

At the same time, the Philly Fed survey's employment component jumped 6 points to 23.6 -- reaching its highest level since May 1973. Also, 58.5% of businesses surveyed indicated that they expect their business activity to increase in the six months ahead.

Taken as a whole, the latest data show a U.S. industrial core that continues to hum, with the manufacturing expansion being propelled largely by emerging-market demand. Products such as electric utility generators produced by General Electric (GE), commercial airplanes manufactured by Boeing (BA) and tractors and other agriculture equipment produced by Caterpillar (CAT) and Deere (DE) are in demand in emerging markets such as India, Brazil, Mexico and Argentina as they build out the infrastructures needed to run a modern economy. At the same time, industrial demand in the U.S. has added another, modest tailwind to the sector.

Investors Shouldn't Ignore Manufacturing Expansion


The bottom line for U.S. investors? Investors don't have to go far to read about problems and concerns that could hurt the U.S. economy. Political and social change is sweeping through the Middle East, pushing the price of oil -- the world's most vital commodity -- above $104 per barrel. In the U.S., Democrats and Republicans still haven't agreed on a full-year federal budget, and a government shutdown is possible. And in selected state capitals, the parties disagree on the right of workers to bargain collectively.

But for savvy investors who can look past the depressing front page of the newspaper, there are bright opportunities ahead. Over the next year -- and possibly longer -- a strong U.S. manufacturing sector is poised to increase both jobs and corporate earnings.


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renaldo1949

give businesses more tax breaks. squeeze the middle and lower classes more in the form of higher energy prices, higher food prices, higher clothing prices, states and local governments raising all kinds of fees, but claiming not raising taxes. on top of all that, wage increase have been flat. does that sound like a recipe for revolution? look at libyia and egypt.

March 07 2011 at 4:44 PM Report abuse +1 rate up rate down Reply
fpfp040408

Employers Added 192,000 in February, Jobless Rate Slips to 8.9%

THANK YOU PRESIDENT OBAMA. OBAMA 2012 = A Sure Thing

March 07 2011 at 11:37 AM Report abuse rate up rate down Reply
bhawkes328

BUT THEN AGAIN HE COULD BE STUPID ENOUGH TO BELIEVE IT LETS ASK HIM

March 07 2011 at 11:28 AM Report abuse +1 rate up rate down Reply
1 reply to bhawkes328's comment
fpfp040408

Trevor does believe it

March 07 2011 at 12:28 PM Report abuse rate up rate down Reply
bhawkes328

HE JUST WRITES IT... DOESNT MEAN HE BELIEVES WHAT HE WRITES YOU KNOW

March 07 2011 at 11:27 AM Report abuse +2 rate up rate down Reply
fpfp040408

Robust Jobs and Retail Reports An unexpected drop in new claims for jobless benefits and higher February retail sales propelled stocks higher. Also bolstering the bulls was the ISM's report that hiring among service companies rose to the highest level since April 2006. THANK YOU PRESIDENT OBAMA. OBAMA 2012 , the man who saved this nation

See full article from DailyFinance: http://srph.it/giQ10U

March 07 2011 at 11:27 AM Report abuse -2 rate up rate down Reply
mullermugs32

As someone stated, Technology has replaced many workers in the manufacturing industry. just watch a science channel or history channel program. I think they are called How it's Made. NAFTA has taken the rest. Corporate America has sold us out along with our government.

March 07 2011 at 10:25 AM Report abuse +3 rate up rate down Reply
1 reply to mullermugs32's comment
Trevor

Not only that, hardly anybody makes buggy whips anymore.

March 07 2011 at 10:31 AM Report abuse +2 rate up rate down Reply
martinsportraits

If Your Toddler was dying of Cancer and had a month to live Joe Lazzaro would put a positive spin on it.......I have about had enough of this clown and his agenda, If there is one thing I can't stand is a bought and paid for journalist! EVERY SINGLE ONE OF THIS GUYS ARTICLES IS A FEEL GOOD PROPAGANDA FAIRY TALE WITH NO BASIS IN ANY TRUTH OR REALITY!

March 07 2011 at 5:29 AM Report abuse +4 rate up rate down Reply
2 replies to martinsportraits's comment
warrenbent

Actually, that the ISM manufacturing index has been soaring, and just hit its highest level in nearly 7 years is not "a feel good propaganda fairy tale", but rather a cold hard FACT.

March 07 2011 at 8:32 AM Report abuse +1 rate up rate down Reply
fpfp040408

warrenbent = great comment - TY

March 07 2011 at 11:28 AM Report abuse rate up rate down Reply
someoneole

Here is Lazzaro again, spin doctor and mouth piece for the politicians and banksers. Yippee!! Happy days are here again he says; go out and spend and buy stocks. The truth is that the unemployment rate is much higher then the politicians say and the housing atm, which drove spending a few years ago has crash, and most people are financially stressed. So, where does he get all the optimistic hype?

March 06 2011 at 7:52 PM Report abuse +3 rate up rate down Reply
4 replies to someoneole's comment
iam awake

Good day , james sims a philadelphia ,a american a student of history, My grand parents ,when hit by the world, buckeled down aka tighten there belts and work they way thu the ,troubles that they had to over come.iam not a writer forgive me. But when i see my country , sitting on its back side, and doing nothing but gripe about ther high cost of everything , is gets my irish scott ducth native american blood pressure up . HEYYYYYYYYYYYYYYYY PEOPLE OK so let do something about it . 40 years ago ,as a boy scout , i learned to save our planet by the progect S O N R .and we recycled everything. we written our goverment to clean up the land and water ways . THIS new aaaaaaaaaa ??? ,new problem has been around for years GAS TO HIGH , Helloooooooooo so now what did we do last time. and did it work??????:????? OR are we going to be a heck of alot smarter. OK FDR had AAA and CCC camps workers building up america OK lets build power let build smart power lets build the GREATEST power the world will come back to america,backing at our door, IF the pres. can do it once well . HEYYYYYY BIG O you can do it again.but its the american way to win over the waves of thiefs the crokes the power mongers that don't care if your kids go hungery and are not going to school.Build america BY americans for everyone aaaaaaaa its the way it should have been , small note do, it metric ok because in there tool box lol 4 fifths of the world have china tools , cheap always breaking ones but they have them . OK we know how ,we know we can , we know its not more oil and gas . IT BRAINS and roll up your sleaves and get it done time .POWER electric safe natural and everlastting . WE took the smarts off the Germans ablot tanks helmits and shoulder held anit tank wepons NOWWWWW check out how they are building up power for there nation , it aint oil well PAL , THIS country is still a young pup on the face of the planet. and in DEEP need of a good swift kick in the pants ,and a whisper in ears WORK smarter NOT harded, GET IT DONE OR ELSE LOOK DOWN AT OTHER SHOE.AN AMERICAN BOOT

March 06 2011 at 7:07 PM Report abuse rate up rate down Reply
Musclepro

We should support Israeli companies more! They have done wonders to help keep the price of oil down for us. Thats why we give them billions yearly right? lol They are so friendly to those oil countries. Oh wait they did help train Mubaracks army along the Gaza border. You know that great guy his people really loved. How about the great Saudi Arabia! .... we really need to support them more!..... No wait Bush did! ....remember $4.50 a gallon right before he left office? ...how easy we forget the Brits and BP ....muhaha.....I guess Bernard Madoff was a great investment for 10 years to the ones who support our allies in Israel.....man do we really need reform in the business world.. Greenspan Berneke AIPAc ponzi scheme still runningf strong.....you know borrow from China and pay foreign nations aid for occupations....muhahaha....9% unemployment and rising amid rising oil prices!

March 06 2011 at 6:37 PM Report abuse rate up rate down Reply