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News December 16, 2021

Economy Watch: Manufacturing Output Soars in November

To keep production surging, manufacturers will need to attract and retain talent – potential opportunity for promo products distributors.

By  Christopher Ruvo

American manufacturing is cranking.

The Federal Reserve said Thursday, Dec. 16 that its manufacturing output index, which measures production at U.S. factories, increased 0.7% in November to 100.6 – the highest reading since January 2019. The strong showing in November followed a robust October in which the output index rose 1.4% month over month.

Manufacturing factory workers

Meanwhile, data showed that output in November 2021 was 4.6% greater than the same month the prior year. Growth could potentially have been even better, had it not been for supply chain disruption, such as a global semiconductor shortage that’s held down motor-vehicle output, for example.

Manufacturing accounts for 12% of the U.S. economy. The surge in output comes during rampant demand for goods, amid COVID-19 consumer habits that have seen Americans shift more of their spending to products from services.

The manufacturing sector accounted for about 5.3% of the sales of promotional products distributors in 2020, according to ASI Media’s 2021 State of the Industry report. Overall, promo’s business with manufacturers was down in 2020 from 2019 amid pandemic-era challenges. Manufacturing’s output increase, however, suggests possible heightened opportunity for promo pros, particularly as manufacturers strive to attract and retain talent in a tight labor market.

Manufacturing chart

The manufacturing sector accounted for 5.3% of promo sales in 2020. (ASI)

The November rise in manufacturing output paired with a 0.7% gain in mining to elevate overall industrial production in the U.S. by 0.5% to its highest reading since September 2019, according to the Federal Reserve. The gain came after a 1.7% jump in October. Utilities production fell 0.8%.

Meanwhile, a separate study from IHS Markit indicated there was a “strong upturn in output” by U.S. private sector businesses in the first part of December. “Service sector business activity growth remained especially sharp, with manufacturers registering a slight uptick in the pace of expansion in production,” IHS said.