U.S. Manufacturing Rides Rising Tide, Buoyed by Global Growth, Optimism
Andrew Tangel and Josh Zumbrun
The Wall Street Journal
November 14, 2017
American manufacturing has picked up pace over the last 12 months thanks to steady global economic growth, a rise in energy and other commodity prices, and increased business confidence.
The sector “absolutely has improved relative to where we were a year ago,” said William Strauss, a manufacturing economist at the Federal Reserve Bank of Chicago, who described the growth as modest.
Employment numbers point to the overall progress. The U.S. manufacturers have added 156,000 workers since Donald Trump was elected president in November 2016, according to government data.
Also, business investment has risen, a sign companies are spending to increase productivity. In the first quarter, investment in plants climbed a seasonally adjusted annual rate of 14.8%, the highest since early 2014. Investment in equipment climbed 8.8% in the second quarter, the highest in almost two years.
Global energy and commodity prices have rebounded amid growth in many economies around the world. That has boosted sales for Illinois-based manufacturing giant Caterpillar Inc. and other makers of heavy machinery used to extract natural resources.
In the process, Caterpillar has increased its domestic workforce by 3,200 from the end of March to 49,700 at the end of September.
Part of the optimism stemmed from the election of a businessman as president last November and Mr. Trump’s promise of reduced taxes and fewer regulations.
Among 70 manufacturing sub-industries tracked by the Labor Department, 19 have seen robust employment increases of 2.5% or more since October 2016, the month before the election.
Still, many business leaders remain hopeful Mr. Trump can deliver an infrastructure-spending plan and trade measures that benefit domestic manufacturers.
Harley-Davidson Inc. Chief Executive Matt Levatich credits Mr. Trump’s administration with turning a welcome spotlight on manufacturing and skilled trades.
American corporate chiefs and other observers see the administration’s actions to roll back federal regulations—an agenda that has moved ahead with less public fanfare—as likely to help in the long term.
The Trump administration, according to [Stanley Black & Decker Inc. Chief Executive Officer James] Loree, has provided the “icing on the cake” for the sector via its deregulatory efforts and its general pro-business approach.
“It’s a moment in time when it’s all coming together,” the Stanley Black & Decker CEO said.