2014 might be the year of American manufacturing, as U.S. companies return their production processes to North America and expand their operations. According to Bloomberg, the Institute for Supply Management's index for U.S. manufacturing increased to 57.3, the highest its been since April 2011. With any reading above 50 signifying growth, manufacturing in the U.S. is continuing at a strong pace. In fact, Bloomberg also reported economists only anticipated the index to reach 55.1, and Industry Week noted forecasters expected the index to have a score of 55.4 in November. For American manufacturers, U.S. economic recovery is a strong motivator to reshore their production processes, but will this movement back to North America translate to growth in offshore manufacturing to Mexico as well?
US manufacturing is prospering
Industry Week reported the ISM numbers show manufacturers are becoming more optimistic about their future growth and are having more positive conversations and interactions with their clients to facilitate continued expansion.
"With 15 of 18 manufacturing industries reporting growth in November relative to October, the positive growth trend characterizing the second half of 2013 is continuing," said Bradley Holcomb, chair of ISM's Manufacturing Business Survey Committee, according to Industry Week.
Bloomberg reported November's index score marks the sixth straight gain in manufacturing, with the averaged pace during the past three months being 56.6. November's score above 57 is a significant victory for the U.S. manufacturing sector as it continues to grow. According to Bloomberg, manufacturers are optimistic about their business opportunities next year. Strong demand coupled with renewed confidence bodes well for U.S. manufacturers' growth in 2014.
Fast growth may cause expansions to Mexico
According to The White House Blog, President Barack Obama is taking steps to continue American manufacturing's fast growth pace, showing an emphasis by the U.S. government to support its manufacturing sector and the profitability of American companies. Expanding to Mexico may help American businesses continue their growth momentum by allowing manufacturers to see higher cost savings while remaining close to U.S. end markets and driving innovation. The White House Blog noted U.S. manufacturing is adding jobs at a considerable pace, faster than the sector has in 15 years. Since the index also reported global manufacturing is on the rise as well, according to Industry Week, strong manufacturing in Mexico may cause American companies to seek cost savings and high quality south of the U.S. border.