Manufacturing leads the way

Bob Moon Feb 15, 2012

Sometimes it seems Wall Street is never satisfied. Sure, U.S. factories boosted their output last month. And, December’s numbers were revised to reflect the best month of industrial growth since before the big meltdown. Problem is, those numbers still came in below expectations.

But the bottom line is still moving in the right direction.

Willy Shih is a management professor at the Harvard Business School. He points to an output gain of 1.5 percent in December and nearly .75 percent last month. Shih says auto sales played a big role. “I know sales out of Detroit were doing much better in January than many of us had expected, so I think that’s good news.”

Manufacturers are doing a good job keeping supply chains lean. “The cost of having the wrong or too much inventory is very high, so people are running things very lean now,” Shih says. Keeping the supply chain lean means being vulnerable to significant disruptions, such as the recent flooding in Thailand or the earthquake in Japan a year ago, but it’s also a sign of careful growth that’s paying off.

Shih warns that major uncertainties still exist: the eurozone’s sovereign debt crisis, the possibility that China’s growth is slowing and the likelihood of higher energy costs, to name a few.

Still, U.S. manufacturing’s comeback is starting to look like the real thing. With any luck, it’ll be strong enough to lead the economy out of the recession.

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.