MarketWatch: A US Manufacturing Revival Is Taking Root. Really.

Monday, 04 Nov 2013 11:01 AM

By John Morgan

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The revival of American manufacturing is not anecdotal or wishful thinking or political posturing — it appears real this time, a MarketWatch analysis of fresh economic data concludes.

Columnist Jeff Reeves says there is a "glimmer of very real hope" for U.S. manufacturing, but the caveat is that it does not necessarily mean a jobs revival or that every industry will be included in the upturn.

"To be clear, this isn't patriotism or charity driving the U.S. manufacturing push," he wrote. "Rising wages around the world, particularly in China, have lessened the appeal of foreign manufacturing operations."

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According to Reeves, the proof of a manufacturing resurgence is in recent economic data.

For instance, Chicago Purchasing Manufacturers' Index leaped to 65.9 percent in October, evidence of surging demand for goods and materials.

Further, the government estimates 500,000 manufacturing jobs have been created since February 2010, and the Institute for Supply Management reported economic activity in manufacturing ramped up in September for the fourth consecutive month,

"It's impossible to avoid the fact that many U.S. manufacturing jobs will never come back, given the cheap labor supply overseas," Reeves wrote.

"But the interesting question going forward will be whether the U.S. corporations dabbling again in onshore manufacturing will continue to see the value of producing goods in America and continue to build momentum in 2014 and beyond."

A 2012 survey showed more than 80 percent of Americans are willing to pay "a bit more" for products manufactured in the U.S., Reeves said.

Because American factory activity expanded at a faster pace in in October, it appears the 16-day partial shutdown of the government did not do much harm effect to manufacturers, The Associated Press reported.

Investors Business Daily (IBD) reported there were additional signs of economic expansion in October.

Gus Faucher, a senior macroeconomist with PNC Financial Services, noted the exports orders index jumped 5 points to 57, a 2-1/2-year high. And new orders and production gauges both remained above 60, he said.

Faucher predicted it is unlikely the Federal Reserve will begin to taper its massive stimulus without better hiring, IBD reported.

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