Not that long ago it felt as if the economy’s manufacturing sector might never recover. Now that idea seems so 2008. Earlier today the Commerce Department reported that factory orders were up more than predicted at 1.1 % last November after rising 0.8 % in October. It may not seem like much but it’s huge–so huge that some economists are suggesting that manufacturing is the area most responsible for recent economic gains. Including December, it’s on a five-month roll.
True there are certainly some mixed signals out there. Durable good demands were up only 0.2 % in November, less than analysts were predicting, due largely to a downshift in orders for airplanes and cars. But an important manufacturing index monitored by the Institute for Supply Management hit 55.9 in December, the highest it has been since way back in April of 2006 (remember 2006?), and tallied 53.6 in November. On that index, anything over 50 is good and points toward growth.
All of which is why this story about differing opinions over the strength and legs of the turnaround appeared today. The most foreboding bit comes in a comparison to Japan in the 1990s when there were several perceived turning points, only to see the whole thing fall apart again. “Japan had lots of upswings,” one economist notes. Gulp.
Only time will tell of course how sustained and meaningful the manufacturing push will be. In the meantime, let’s all keep in mind that while we once felt as though we were turning Japanese, there is still a chance our economy will not.MM