COMMENTARY
Manufacturing, since mid-2020, has been mostly a good news story. In early 2020, manufacturing was hit by the COVID-19 pandemic. Then, the sector began its recovery.
That manufacturing surge lasted through 2021 and 2022. But, at the start of this year, manufacturers are feeling economic pain.
The Institute for Supply Management, Tempe, Ariz., compiles an index, known as the PMI. It’s based on a survey of executives of 18 industries. It’s considered a leading economic indicator, a sign of where the manufacturing economy is heading.
The PMI has been in negative territory for four straight months.
For most of 2021 and 2022, manufacturing employment recovered and expanded following the COVID-19 pandemic. Yet, things slowed toward the end of 2022. In February, manufacturing lost 4,000 jobs, according to the Bureau of Labor Statistics.
Manufacturing faces significant economic headwinds. The Federal Reserve is boosting interest rates to cool the economy and reduce inflation. Last week, Fed Chairman Jerome Powell in Congressional testimony indicated those efforts aren’t ending soon.
Even bright spots in manufacturing, such as motor vehicles and parts, are feeling the pinch.
General Motors Co., the largest U.S.-based automaker is offering buyouts to salaried workers to cut costs.
Detroit-based GM reflects how the company seeks the transformation of the industry to electric vehicles. Essentially, GM is clearing the decks to prepare for that change.
Another major U.S. manufacturer, plane maker Boeing Co., still is unsettled. The company had major problems with its 737 Max and 787 Dreamliner aircraft. Boeing, once known for manufacturing excellence, has absorbed a hit on its reputation. That’s because of fatal crashes with the 737 Max and manufacturing issues with the 787 Dreamliner.
In February, based on the Bureau of Labor Statistics report released March 10, punched below its weight. Other sectors paced a gain of more than 300,000 jobs.
The Institute for Supply Management, in a December forecast, said it expected the manufacturing economy would improve in this year’s second half.
That remains to be seen. For now, manufacturing is expected to feel more economic pain.
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