American Manufacturing Is Finally Growing Again

Manufacturing Activity on the Rise

The U.S. manufacturing sector finally showed signs of life in March, after contracting for nearly a year and a half.

Production increased and new order tallies rose, but why now? It’s all about demand.

Growing demand is boosting output, and in turn spurs optimism that the future of manufacturing will look brighter. But that doesn’t mean all worries are resolved. Supply chain pressures, especially when it comes to raw materials, are still driving prices higher, weighing on the sector.

Four of the six biggest manufacturing industries, which together account for more than half of manufacturing GDP, reported growth in March: Chemical products, fabricated metal products, food, beverage, and tobacco products, and transportation equipment. The two industries that contracted were electronics and computers and petroleum and coal.

Economic Impact

TThis rebound in manufacturing activity signals improving business conditions and could be a promising sign for the overall economy, which has remained strong in the face of price pressures.

That said, high costs for raw materials could impact the prices of goods down the road and keep the pressure up on inflation. Overall prices paid by manufacturers rose 3.3 percentage points in March, with 24% of companies reporting higher prices, a notable increase from the previous month’s 18%.

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