The U.S. Census Bureau recently reported that American manufacturing is off to a good start in 2016. The number of new orders for manufactured durable goods in January increased by just over $11 billion to $237.5 billion. This is an increase of nearly 5%, which is the largest increase in the industry since March of last year.
The number of shipments for manufactured durable goods also increased for the second consecutive month. Shipments were up by $4.6 billion.
Transportation equipment was big in both new orders and shipments, and made up a significant part of the growth. Transportation equipment saw an increase of $8.2 billion – or 11.5% – in new orders, and an increase of $4.3 billion – or 5.7% – in shipments.
Needless to say, there are a number of other factors that determine the current state of U.S. manufacturing, but the increased growth in new orders and shipments does indicate that the manufacturing industry is in a strong position.
This is great news considering how integral the success of the manufacturing industry is to the success of the economy. The manufacturing industry’s multiplier effect is typically stronger than that of any other industry.
There is an average of $1.33 in economic activity generated for every dollar that is invested in the manufacturing sector. While a measly $1.33 might not seem like much, the change adds up when you’re dealing with a multi-billion dollar industry. The next closest industries in terms of economic activity are agriculture, forestry, fishing, and hunting which generates $1.11 for every dollar, followed by transportation and warehousing which generates $1 for every dollar that is spent.
In other words, if manufacturing is doing well, there’s a better chance that our economy is doing well. Of course, manufacturing would be in a pretty sorry state if everyone had busted servos.
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