Manufacturers greet new year on an upswing

  • Article by: DEE DEPASS , Star Tribune
  • Updated: January 2, 2014 - 9:14 PM

Minnesota was one of several states reporting strong growth that’s expected to continue.

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Economic conditions in Minnesota and around the Midwest are improving. Pictured is a trader at the Chicago Mercantile Exchange on Tuesday.

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Minnesota’s manufacturers closed out 2013 on a high note as they benefited from solid increases in sales, new orders and a jump in employment.

December was the 13th consecutive month of growth, with factory conditions surging in the second half of the year, according to a closely watched report Thursday by Creighton University. The news punctuates the ongoing comeback among Minnesota’s manufacturers, which added thousands of jobs last year and have returned production to the state from overseas.

“Durable-goods manufacturers and engineering services firms ended the year growing at a very healthy pace,” said report author and Creighton economics professor Ernie Goss.

The report, which surveys manufacturers from nine mid-America states, said growth among those firms was strong enough to overcome declines in the food and ethanol processing sectors and helped jolt the state’s monthly business conditions index to a healthy 58.9 from 55.7 in November.

Any index higher than 50 signals growth, while any figure below 50 signals an economic decline.

Meanwhile, the Institute for Supply Management, a trade group of purchasing managers, said Thursday that its index of manufacturing activity slipped to 57 from 57.3 in November. But that’s still the second-highest reading in the past 2½ years.

“It is clear that growth remained strong at the end of the year and this should continue into 2014,” said Paul Dales, an economist with Capital Economics.

Trends in Minnesota closely mimicked results found nationwide and in the nine-state mid-America region, which encompasses Minnesota, Missouri, Iowa, South Dakota, North Dakota, Kansas, Arkansas, Nebraska and Oklahoma. Both the Creighton and ISM reports showed solid improvements in factory orders, business conditions and confidence during the last half of the year, particularly in December.

The ISM survey results “generally reflect a solid final month of the year, capping off the second half of 2013, which was characterized by continuous growth and momentum in manufacturing,” said ISM business survey committee chairman Bradley Holcomb.

Industry buoyed

The uptick in manufacturing is being celebrated by the industry, which at various times has been beset by federal budget cuts, the government shutdown and the ramifications of the new Affordable Care Act. But in the end, such government actions did not dampen orders or stall growth.

Instead, “The ISM data reflected expanding manufacturing activity for seven consecutive months,” said Chad Moutray, chief economist with the National Association of Manufacturers. “Manufacturing activity in the U.S. grew strongly in the second half of 2013, with overall new business up significantly. The indices for new orders and production continue to reflect healthy increases and manufacturers tend to be mostly upbeat about future activity.”

Moutray encouraged policymakers “to keep the momentum going by considering progrowth measures that allow the sector to flourish and build on the progress seen over the past few months.”

Such progress proved widespread as 13 of 18 manufacturing industries grew in December. Results were led by furniture, plastics, textiles, computer and electronic products as well as paper, transportation equipment and metal and wood products.

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