PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Continued Strength in the Industrial Sector: Are We Heading Toward the Best Year for Industrial Sector Since the Late 1990s?

By at 16 October, 2018, 2:00 pm

by Raymond J. Keating-

Strength in the U.S. industrial sector continued in September, according to the latest report on industrial production from the Federal Reserve.

Total industrial production – i.e., the output of the nation’s industrial sectors, i.e., manufacturing, mining and utilities – grew by 0.3 percent in September. And keep in mind that the Fed reported, “Output growth in September was held down slightly by Hurricane Florence, with an estimated effect of less than 0.1 percentage point.” Industrial production has moved up in the last five months, and over the past year, has grown by a robust 5.1 percent.

In terms of major industry groups, manufacturing production expanded by 0.2 percent in September. Growth has been positive in each of the last four months, and over the past year, growth has been solid at 3.5 percent.

As for mining, strong growth persisted, up by 0.5 percent in September, and by 13.4 percent over the past year. The Fed noted, “The index has advanced about 24 percent from its trough in 2016, supported by gains in the oil and gas sector.”

Keep in mind that total industrial production has grown by 6.4 percent over the past two years, as opposed to a drop of 3.6 percent over the previous two years.

Similarly, manufacturing production increased by 4.9 percent over the past two years versus a decline of 1.5 percent over the previous two years. The shift in the economy starting in late 2016 has been dramatic – and the fact that this coincides with a shift in federal policymaking away from tax and regulatory increases to tax and regulatory relief is no mere coincidence.

Finally, when factoring out the slight bounce back experienced in 2010 after the drastic declines suffered in 2008 and 2009, the U.S. could experience in 2018 the largest gain in industrial production since the late 1990s.

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Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

Keating’s latest book published by SBE Council is titled Unleashing Small Business Through IP:  The Role of Intellectual Property in Driving Entrepreneurship, Innovation and Investment and it is available free on SBE Council’s website here.

 

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