Manufacturing industry has reasons to be positive in 2014

The manufacturing industry should be excited for 2014.

Businesses in the manufacturing industry should be looking forward to 2014 as the Manufacturers Alliance for Productivity and Innovation Business Outlook survey reported good news.

The survey's index improved to 67 for December 2013. This is a one point jump from September 2013 when the index reading was 66. The survey is a barometer for how business will fare in the manufacturing industry. Along with showing an improvement in the fourth quarter of 2013, the 67 reading is the highest the business outlook index has been since September 2011. Donald Norman, MAPI senior economist and coordinator of the survey said the increase is positive for the manufacturing industry.

"The increase in the composite index and the continued improvement in most individual indexes signal that there is momentum pushing manufacturing activity and that activity is expected to increase over the next three to six months," Norman said regarding the survey. "The results suggest the sector has reason for optimism for all of 2014."

Record numbers
For 17 straight quarters, the survey has had a reading of over 50, which is the "dividing line between expansion and contraction, and points to continued expansion over the next three to six months," Norman said.

The survey has several indexes which gauge activity for the industry. The inventory index rose to 61 from the 49 reading in September. MAPI said this reading shows there will be an inventory buildup among businesses in the industry. With an increase in inventory, many businesses may want to want to hire additional employees to deal with demands. Companies can use manufacturing recruiters to help them fill vacant positions.

Profit margins also increased as the index increased from 68 to 72. Annual orders index increased from 81 in September to 86 in December. The survey said this index is important because it compares the orders of 2013 to all the orders that will occur in 2014. It gives businesses an idea of how much they will have to produce throughout the year.

Economic outlook a factor
Although several indexes rose, a few dropped a bit. Research and development fell from 66 in September to 61 in December, along with non-U.S. investments dropping to 41 from 54. Norman said concerns about the global economy reflects this drop.

"The sharp drop in the non-U.S. investment index likely reflects concerns about economic conditions in parts of the Eurozone and Latin America, as well as the rising cost of operations in China,"

×