U.S. factories have seen better days. Slow global growth and a strong dollar are weighing on manufacturers’ international ambitions. But a solid U.S. job market and still-low interest rates are supporting factories focused on domestic customers. That divide, as the Journal reported Monday, is showing up throughout recent manufacturing reports. Some recent evidence:
New Orders Up
New orders for manufacturers have grown for four consecutive months in their best streak since last summer, according to the Institute for Supply Management, a trade group for purchasing managers. That index within the ISM report, a barometer of national manufacturing, registered at 55.8 last month, solidly above the 50 mark that separates expansion from contraction. “New orders drive our system,” said Bradley Holcomb, chair of the ISM manufacturing survey committee. While new orders comprise both domestic and foreign demand, He highlighted particular growth in fabricated metals, wood and furniture, all areas connected to the auto and housing markets.
But Export Orders Lag
A break in the dollar’s upward march helped exporters in the past couple of months. But less-bad isn’t the same as good. ISM data shows that the index of new business orders representing foreign demand for U.S. manufactured goods has averaged 49.5 this year, lagging total new orders by five points. Meanwhile, competing data provider Markit said export orders fell back below 50 last month, marking the third contraction in six months. The data indicate domestic demand has driven the pickup in new orders. Further evidence: About a third of firms surveyed by the ISM said the strong U.S. dollar would hurt profits this year. But more than half–likely those that don’t sell much abroad–said the dollar’s impact would be negligible or positive.
