The U.S. manufacturing sector looks to be struggling. At the very least, U.S. manufacturing data suggests the U.S. economy is headed towards a slowdown.
Industrial production in the U.S. fell for the fifth straight month in April 2015. According to the data from the Federal Reserve, industrial production declined 0.3% month-over-month in April. (Source: Federal Reserve, last accessed May 21, 2015.)
This isn’t all. When I look at the regional data, they paint an even more gruesome picture of the U.S. manufacturing sector.
Regional Manufacturing Slows in the First Quarter
According to the Texas Business Outlook Surveys (TBOS), casino the manufacturing index is below its 2014 average, with the three-month moving average in March for manufacturing going into negative territory for the first time since the recession. (Source: Federal Reserve Bank of Dallas, last accessed May 21, 2015.)
According to the Federal Reserve Bank of Dallas’s outlook, future business conditions continue to be weak for April in the manufacturing sector. The Texas Manufacturing Outlook Survey general business activity index remained negative for the fourth consecutive month in April—an indication of slowing economic growth. (Source: Federal Reserve Bank of Dallas, last accessed May 21, 2015.)
Philly Fed Business Outlook Remains Dismal
The Federal Reserve Bank of Philadelphia also reports on the manufacturing activity in its region. It suggests that its regional manufacturing activity is dismal as well.
Please look at the chart below.
(Source: Federal Reserve Bank of Philadelphia, last accessed May 22, 2015.)
The Federal Reserve Bank of Philadelphia Manufacturing index is a leading indicator of economic health for the third Federal Reserve district. It tracks manufacturers’ business activities; such as plants, employment, working hours, news orders, shipment, and inventories, among other activities. (Source: Federal Reserve Bank of Philadelphia, last accessed May 22, 2015.)
The Philly Fed Manufacturing index decreased from 7.5 in April to 6.7 in May. Looking at the bigger picture; since November of 2014, or in the last seven months, this index has collapsed over 83%. Back in November, it stood at 40.2.
Although any number above zero on the Federal Reserve Bank of Philadelphia Manufacturing Business Outlook index suggests improving conditions, a decline this big should be taken very seriously.
What the Regional Manufacturing Data Actually Says
All told, when I look at the data from different regions in the U.S., it doesn’t really show any traits of a growing economy. In fact, it tells me that U.S. economy may be slowing down.
I continue to wonder if there’s a recession in the books for the U.S. economy in early 2016.