Corey DeMoss assembles a railing assembly for an escalator at the Giese… (Daniel Acker / Bloomberg )
WASHINGTON -- American manufacturing activity dipped slightly at the start of the year as companies felt the weight of a weak global economy and automakers took a breather after heady production late last year.
But on the whole, new Federal Reserve data Friday were largely positive and heartening for the manufacturing sector -- a major engine of economic growth that slowed last year.
The Fed report showed industrial production in last year's fourth quarter was much stronger than previously reported. And recent regional manufacturing reports suggest that production looks to be turning up.
The New York Fed said Friday that its Empire State manufacturing index jumped 10 points in February, with new orders and employment showing surprising vigor. The unexpectedly strong reading from New York follows a separate report earlier this month indicating improved factory conditions in the Midwest.
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Taken together, analysts said there was little to be concerned about concerning the 0.1% drop in January of overall industrial production. That came on the heels of a 1.9% annual rate of increase in manufacturing in the fourth quarter. Previously, the fourth-quarter gain was estimated at just 0.2%.
Looking ahead, American manufacturers must still grapple with weak demand from the Eurozone and Japan, which were in recession last year and contributed to a slowdown in exports. But China's economy appears to have picked up recently, and some other major developing economies also are expected to grow faster this year. That, along with stronger domestic business investments, should help American manufacturers.
"The forward-looking surveys have continued to improve," said Paul Dales, an economist at Capital Economics. "This suggests that manufacturers are feeling some benefits from the slightly stronger global backdrop. Global growth will still be fairly weak this year, which will prevent industry from firing on all cylinders. But there’s no denying that industrial conditions have recently improved."
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