The improvement in manufacturing output could be an early sign of a pickup in the broader economy.
San Francisco, CA (PRWEB) January 24, 2013
Will economic improvement occur in 2013 following better manufacturing output as reported by the Federal Reserve, asks the Lending Circle? After struggling throughout much of the year, the U.S. economy ended on a strong note in December 2012 with low inflation helping to boost consumer spending power and improving factory output contributing to an increase in economic activity. The U.S. Labor Department reported that consumer prices remained flat in December, while weekly earnings rose 0.6 percent on an inflation adjusted basis; the Federal Reserve reported an increase in manufacturing output of 0.8 percent for December.
“The improvement in manufacturing output could be an early sign of a pickup in the broader economy,” said Terry Robinson, president of the Lending Circle, a division of Sunovis Financial. “Combined with the lack of inflation, this increase in demand should bolster the economy without prompting the Fed to change their stance on interest rates, which is good news for both businesses and consumers.”
Analysts point out that the payroll tax increase is likely to subtract a full percentage point from GDP growth in 2013. The payroll tax increase is meant to help reduce the ever increasing federal budget deficit, but another effect it has is a decrease in consumer spending.
The manufacturing output increases were greater than expected by analysts and appeared to be broad based across all manufacturing sectors. Motor vehicles and parts led the increase, rising by 2.6 percent. This was followed by electronics and computers which were up by 1.5 percent. Machinery production climbed 0.6 percent.
While the December numbers were encouraging, Robinson says, the overall the picture for manufacturing is unfortunately as lackluster as that for the broader economy. Consumer goods output actually fell by 0.1 percent and though the December uptick of 0.8 percent was impressive, for the entire fourth quarter manufacturing only gained a tiny 0.2 percent on an annual basis.
So the question remains - will the better manufacturing output as reported by the Federal Reserve indicate a better economy in 2013? Only time will tell, says The Lending Circle.
About The Lending Circle
The Lending Circle, a division of Sunovis Financial, works to address the great pent-up need for financing nationwide, and will help borrowers with their needs whatever they may be. Their broad network of lenders is positioned to provide capital where it can do the most good.