January’s Federal Reserve “Beige book” highlighted some encouraging developments in our local economy. Manufacturing activity grew at a moderate pace in the Boston area, as well as in New York, Chicago, and San Francisco, according to the report. Other studies indicate that overall employment in Massachusetts continues to improve, and is expected to reach nearly 3.5 million by the end of 2015, up from less than 3.3 million at the end of 2011. While the healthcare and professional services sector are expected to add the most jobs, manufacturing is expected to continue to add jobs in Massachusetts in 2015.
In addition, the ISM’s January PMI index stood at 53.5 nationally, down from December’s reading of 55.1 percent, still indicating growth in manufacturing for the 20th consecutive month.
Nearly all manufacturing firms surveyed by the Fed reported stronger sales, with many expressing “surprise at how strong demand has been in 2014”. One manufacturer of testing equipment said sales were strong overall but flat in China, a big change from historical annual increases of 20 percent.
According to state-by-state data compiled by the National association of Manufacturers, Massachusetts in #17 in total manufacturing output ($45 billion; note, we’re 14th in overall population), and #1 in average compensation in the sector ($99k per year – up there with California, Connecticut and New Jersey). About 1-in-11 non-farm workers in the US work in manufacturing, compared with 1-in-13 in Massachusetts. High-value advanced manufacturing is where Massachusetts excels.
Where are the areas of concern? The strengthening dollar is impacting some firms’ profitability. Hiring was generally up, but no Massachusetts firms in the Feb survey reported significant upward revisions to their hiring plans. Some good news for capital equipment providers – capital expenditures are steady or up at most firms, generally consistent with long-term plans.
We continue to see our clients enjoying the recovery in demand for high value manufactured products made in Massachusetts.