The state of the November 2016 manufacturing economy can often dictate how much growth certain industries are or will be experiencing, which can influence their business decisions and modernization requirements. Consequently, Ultra takes a huge interest in world economic affairs, with special focus on the U.S. manufacturing and distribution industries. Our state of the economy update for November includes facts and figures captured in October, as well as details about events that have major sway over the economy.
Remember, Remember, the 9th of November
No matter who you voted for, or even what country you live in, the United States’ election cycle closed on November 9th. With Donald Trump being the more difficult-to-predict candidate, markets have been a little unsteady themselves. It is important to note this development and its effect on the November 2016 manufacturing economy, as the numbers captured in October may change in a different way because of the election. Furthermore, other political events such as Brexit, and the upcoming elections in France don’t bode well for stable markets across the board.
Although politics make the markets difficult to predict at the moment, there are a few other developments to note. China and Japan both expanded manufacturing activity, and growth occurred in the Eurozone again this month, leading up to a three-month high. However, many of the major markets for U.S. manufactured goods contracted, including Canada and Mexico.
More specific to the U.S. in terms of our November 2016 manufacturing economy, each region experienced different developments last month. Factory activity in the south increased while the production index, a key measure of state manufacturing conditions, posted a fourth consecutive positive reading but moved down to 6.7.
In the Northeast, the index for current manufacturing activity in the region edged down, from a reading of 12.8 in September to 9.7 this month. Additionally, the Philadelphia/Northeast region releases special questions as part of its survey, and this month firms were asked about their plans for different categories of capital spending next year. More firms expected decreases than expected increases next year for software, computer and related hardware, structures, and energy-saving investments.
The Northeast is also dictated by New York, which showed labor market conditions remaining weak, with both employment levels and the average workweek decreased. Price indexes increased somewhat, and continued to signal moderate input price increases and a slight increase in selling prices. However, indexes for the six-month outlook suggested that manufacturing firms expect conditions to improve in the months ahead.
The Midwest Region, represented by Kansas State, had expanded manufacturing activity again this month, especially in machinery and fabricated metals. And lastly, the California region shows an uptick in electronics manufacturing in an effort to compete with Asian companies.
Ultra’s Take On the November 2016 Manufacturing Economy for Manufacturing and Distribution
Overall, due to recent events in politics and society, markets are difficult to predict. Worldwide markets seem to be trending away from U.S. manufactured goods and more towards Chinese or Japanese goods. Hence, because of the lower demand for U.S. goods, the October reports show that manufacturing is generally sluggish across all the districts in the U.S. apart from the Midwestern region.
Furthermore, Philadelphia’s special questions section show that firms expect decreased spending on software and computer equipment. The special questions section can be especially telling for Ultra because it gives us an idea of where companies are willing to spend now. Currently, it seems that software is at the bottom of the priority list which means companies are not focused on modernization but more so on general business and maintenance. Although these indicators suggest an uphill battle for ERP vendors or consulting companies, the markets are volatile right now due to a great many factors.
Don’t fret, we’ll see how this all shakes out in the coming months. Stay tuned for December’s update!