A recent article [U.S. manufacturing activity falls to lowest level in decade, Jan. 3] reported that the Institute for Supply Management’s national manufacturing index, an indicator of changes in production levels from month to month, was at its lowest level in more than a decade. It dropped from 48.1 in November to 47.2 in December, the lowest it’s been since the Great Recession.
These numbers shouldn’t panic Hoosier manufacturers.
It’s no surprise that manufacturing companies across the United States were decisively slower to grow in 2019 because of uncertainties surrounding trade tensions with China and the looming threat of a recession. However, now that an initial agreement with China has been signed, some of the tension caused by tariffs and threats of additional import taxes should start to subside. As far as a looming recession, there’s no doubt the national economy is slowing; however, as most economists agree, there are no real signs of recession in the immediate future.
The data also shows Indiana manufacturing is not taking a hit anytime soon.
The U.S. Bureau of Economic Analysis placed Indiana as the top state in the Midwest for income growth for most of 2019. In addition, more than 80% of all respondents to the 2019 Indiana Manufacturing Survey—published by Katz Sapper & Miller in partnership with Indiana University’s Kelley School of Business and the Indiana Manufacturers Association—expect revenues to increase in 2020. Nearly half of all respondents anticipate rapid growth in the next three to five years (up from one-third in the 2018 survey).
We see these sentiments among our clients as well. Although some companies delayed shipments and were a bit indecisive on purchases at the end of last year, they started 2020 very optimistically.
My advice for 2020? Don’t panic. The stage is set for what promises to be an exciting new decade for Indiana manufacturing. While challenges will most certainly continue to arise, we’re confident the industry will not only overcome them, but will remain on top as our state’s most important business sector.
Partner, Manufacturing and Distribution Services Group
Katz Sapper & Miller