Dollar’s Gain to become Manufacturing Sector’s Loss

Published By : 18 Mar 2015 | Published By : QYRESEARCH

The manufacturing sector in the U.S. is currently higher than most people would justifiably assume. The incorrect assumptions are justified due to the mixed messages acquired from the fluctuating Industrial Production Index ratings last month.

According to a survey undertaken by the Wall Street Journal, the Industrial Production Index gained by 0.2% over the January figures, the same growth rate observed in January. This also means the February ratings are up by 4.8% from the figures 12 month ago. The average year on year growth has been between 2.3% and 6% every month for the last year, both rates signifying perfectly healthy growth. So even though the 4.8% yearly rise is nothing to cheer about, it does hearten the industrial sector.

Manufacturing has made an immense gain in the Index, with the 5.6% growth rate observed in February this year comfortably outstripping the 1.5% annual growth rate observed in January last year. This is the highest growth rate posted by the manufacturing sector in 4 years. On the other hand, other parts of the Industrial Production Index such as electric and gas utilities have experienced a downward curve over the last 12 months. The electric and gas utilities sector increased by 8.4% year on year January last year but shrunk by 6.6% 12 months later.

However, the U.S. Dollar Index, which went above 100 last week from 80 last June, could pose a formidable obstacle for the manufacturing sector. This potential roadblock is the opposite of what happened due to the strengthening of the dollar in the 1980s.

The manufacturing sector seems set to jump past this obstacle, though, with exports and imports both experiencing valuable gains in the last month; year on year rates for the former increased by an inflation-adjusted 2.9%, while the latter jumped by 5.2% in January.
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