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U.S. industrial production fell in August; SMEs project strong second half

The dichotomy of the manufacturing economy seems to continue, and uncertainty still plagues some small to midsized enterprises (SMEs). Even as the Federal Reserve announced that industrial production fell in August by the largest amount in more than three years (down 1.2% compared to July), a survey from Prime Advantage, a leading buying consortium for midsized manufacturers, projected a "strong second half" of 2012.

Clare Goldsberry

September 17, 2012

2 Min Read
U.S. industrial production fell in August; SMEs project strong second half

The Federal Reserve's August report, released Sept. 10, showed that manufacturing output, the most important component of industrial production, fell 0.7%, led by a 4% drop in output of automotive plants. This was on top of the other dismal reports from the Institute for Supply Management (ISM) which appeared in this publication earlier this month, as well as the mere 96,000 jobs added.

Now for the good news: small to medium-sized enterprises responding to the tenth semi-annual Group Outlook Survey conducted by Prime Advantage, reported "healthy revenue projections, strong hiring, and capital spending plans." The one caveat coming from the survey came from a small portion of respondents that these plans may experience delays due to uncertainty about the results of the federal elections.

Some of the highlights from the Prime Advantage survey are as follows:

  • 48% expect to see their revenues increase from the first half of 2012.

  • Overall increase in customer demand was named the primary reason for the revenue growth accounting for 58% of responses.

  • The cost pressures from raw materials continue to lessen.

  • Midsized manufacturing companies expect to increase new hires at a greater rate in the second half of 2012, as compared to the same period in 2011.

  • Healthcare costs have become the second highest cost pressure concern for manufacturer.

  • Of those who hold an opinion about whether the uncertainty with federal elections will cause a delay to business processes, 29% and 33% are seeing delays in employment and capital spending, respectively. Fifty-five percent of respondents believed the impact on the economy would be felt greatly and 43% predicted an impact on unemployment.

"We are looking at a stronger 2012 year-end for midsize manufacturers than a year ago," said Louise O'Sullivan, founder, president and CEO of Prime Advantage. "Today, while there are clearly mixed sentiments about the economy, more surveyed midsize manufacturers expect increased in revenues, capital investment, and hiring than a year ago—all great indicators of a continued recovery for the manufacturing economy."

In August 2012, Prime Advantage surveyed executives and purchasing professionals that represent durable goods manufacturing firms, with annual revenues ranging between $10 million and $4 billion, of which the majority ranges between $20 million and $500 million. The survey received a 16% response rate from 518 top professionals representing U.S.-based manufacturers in more than 25 different industries.

About the Author(s)

Clare Goldsberry

Until she retired in September 2021, Clare Goldsberry reported on the plastics industry for more than 30 years. In addition to the 10,000+ articles she has written, by her own estimation, she is the author of several books, including The Business of Injection Molding: How to succeed as a custom molder and Purchasing Injection Molds: A buyers guide. Goldsberry is a member of the Plastics Pioneers Association. She reflected on her long career in "Time to Say Good-Bye."

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