U.S. Manufacturing Output Rises for Ninth Straight Month Despite Challenges

Recent reports show resilience in the manufacturing sector as output increased 1%  month-over-month in January, following a 0.9% growth in the prior month. That makes January the ninth straight monthly advance in factory production. Fortunately, the overall economy also grew, following the same pattern as the manufacturing sector.

Economists predict that the year will start off slowly, but the economy will pick up as COVID-19 vaccination initiatives gain traction.

While manufacturing currently accounts for 11.9% of the U.S. economy, the pandemic has caused a shift in popularity from the service and travel industry to manufacturing of homegoods, clothing, and other deliverable items.

The continual growth in output comes rather unexpectedly, as a shortage of semiconductors has taken a toll on the production of motor vehicles–the total of motor vehicle and parts output declined 0.7% in January.

Ethan Karp, President and CEO of MAGNET, a nonprofit manufacturing consulting group, noted that the “extreme uncertainty” of the pandemic period is abating, allowing manufacturers to make long-term decisions again, according to IndustryWeek.

US manufacturing output increases for January

“Labor remains the biggest challenge, which in many ways is back to normal,” wrote Karp. “Pre-COVID, during-COVID, and surely post-COVID, we will still have a labor shortage. Automation, investment in new technologies, and investment in creating pipelines are critical to solving this long-term. More manufacturers are now considering wage raises at the frontlines to see if that makes an impact because they see that even with high unemployment, the workforce challenges remain.”

Karp’s dilemma is an issue that many U.S. manufacturers are facing as production returns domestically. Positions are becoming available, but there aren’t qualified candidates to fill them. But, despite employee uncertainty, Karp remains optimistic for the future of U.S. manufacturing.

“Eight months of solid growth as reported by ISM seems to have given a bit of comfort,” he wrote.

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