Since the end of the Great Recession, the manufacturing industry has been among the major drivers of growth in the United States, an uncharacteristically strong position for a segment of the economy that has been challenged for more than a decade. Some have suggested that manufacturing in the United States is actually experiencing a bit of a renaissance, as labor costs in China continue to rise and domestic productivity and competitiveness improve.
In the first half of 2011, the earthquake in Japan and the related nuclear disaster weighed on the global supply chain and the industrial output suffered. Adding to supply issues, surging commodity costs took a bite out of demand as well. The subsequent improvements in supply chain flow and easing commodity price pressures appear to have contributed to the subsequent surge in manufacturing activity. Leading economic indicators, nonetheless, are providing fresh signs that a slowdown in the manufacturing sector may occur in 2012. Given the highly cyclical nature of the industrial sector, the nearterm outlook for manufacturing will be understandably correlated to the direction of the economy as a whole.