US Manufacturing is slowly but surely seeing a revival in terms of its job market. This is largely thanks to the decreasing energy costs in US along with growing labor costs in China. In fact, energy usage is equivalent to only about 17% of US gross domestic, while China’s energy usage equals about 27 percent. This decrease in energy costs is due in part to a rise in shale oil and natural gas exploration in the U.S. By 2015, prices for natural gas are expected to be 60 to 70 percent cheaper in the U.S. than in Japan or Europe. Electricity prices are also predicted to go down in the US, anywhere from 40 to 70 percent cheaper compared to other countries.
With this steady surge in the manufacturing industry, the US economy is seeing a modest recovery. Many types of companies in all different job markets are starting to add more employees to their payrolls, thus causing the unemployment rate to go down. These trends are only expected to continue in the years ahead, and as a matter of fact, manufacturing is predicted to remain a positive contributor to the economy in 2014. This is because consumers are expected to spend more on cars, appliances and durable goods, and businesses are likely to increase spending on new capital equipment.
A recent survey from the Institute for Supply Management (ISM) showed that its October ISM manufacturing index increased from 56.2 to 56.4 in September, which is the highest it’s been in over two years. This reading indicates that more manufacturers are reporting improving conditions for their companies, and therefore, many firms are seeing more long-term manufacturing conditions.
The US economy still has a long way to go in order to improve, but as of right now, conditions remain favorable for growth in 2014. Likewise, manufacturers will benefit from consumer demands and continue to strengthen in the imminent future.