August 24, 2009

U.S. manufacturing activity on upswing

U.S. factory activity is on the upswing, even amid weak consumer spending, as manufacturers move to replenish inventories, statistics indicate.

The Federal Reserve Bank said last week the mid-Atlantic's manufacturing sector grew for the first time since September, and U.S. industrial production rose 0.5 percent in July, the first monthly increase since December 2007, USA Today reported Monday.

Analysts told the newspaper that manufacturers were moving to make up for production cuts that were so deep they depleted inventories even though consumer spending remains weak. Factories must now reportedly increase their output to meet even modest demand, eventually replenishing stocks.

Production is going to gradually build up steam, said David Huether, chief economist for the National Association of Manufacturers, joining other observers who said the numbers were another sign of a nascent economic recovery.

Others, however, warned that until consumers again feel confident enough to spend the factory uptick will be temporary.

Unless we get a significant pickup in sales, it's not likely to prove all that sustainable, Wells Fargo economist Mark Vitner told USA Today.