Orders for equipment that helps manufacturers make things — known as core capital goods — hit a 40-year high in January.
Manufacturers know that demand for their goods is not a problem.
“The challenge has been meeting that demand, with all of the supply chain issues, and workforce challenges that we continue to see kind of around the world,” said Chad Moutray, chief economist with the National Association of Manufacturers.
So, manufacturers have been ordering more equipment – things like metalworking tools, power generators, computers.
And it’s not just physical capital we’re talking about, “but also human capital. So you see very strong job openings data,” Moutray said.
Consumer spending, however, has started moving away from goods and more toward services, like restaurants and entertainment. That could help the manufacturing sector catch up. said Lydia Boussour, lead U.S. economist at Oxford Economics.
“So what we want to see going forward is a little bit less demand for goods, so that we see that rebalancing between, you know, supply and demand,” she said.
Even as services spending continues to grow this year, Boussour said manufacturers will still have plenty of demand for their products.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.