U.S. Economic Growth Continues: Textile Mills Lead ISM Report

BornemanBy James M. Borneman, Editor In Chief

As of early May, the news could hardly be better for the U.S. economy, and textiles are participating in the growth story.

With politics flying, and the news spinners spinning, the contrasting interpretations of the economic data couldn’t be more divergent. But all told, it is darn good data.

The U.S. economy added 263,000 jobs in April surpassing the 190,000 forecast, and pushed down unemployment to 3.6 percent compared to the 3.8 percent expectation — posting the lowest figure since December 1969.Wage growth in the form of average hourly earnings held at 3.2 percent bringing the average pay to $27.77 an hour.

But the growth story continues with the gross domestic product (GDP), which increased 3.2 percent in the first quarter. Productivity also was up 3.6 percent — the largest gain in five years and achieved in an environment of fairly low inflation.

According to the latest Manufacturing ISM® Report On Business® published by the Tempe, Ariz.-based Institute for Supply Management® (ISM®): “Economic activity in the manufacturing sector expanded in April, and the overall economy grew for the 120th consecutive month, say the nation’s supply executives.”

Again the textile mill sector is performing well, coming in first out of 13 growing manufacturing sectors. Growth is one of the most misunderstood and underrated factors in play in an economy. It acts like steroids and amplifies many outcomes —not to be feared, but closely monitored.

So why the long faces beyond the political spinning? … the global economy. On the world stage, the U.S. economy is a stand-out. But most Americans don’t feel the contrast with the global economy.

Check out this headline from International Monetary Fund World Economic Outlook, “April 2019 — Growth Slowdown, Precarious Recovery.” According to the report: “After strong growth in 2017 and early 2018, global economic activity slowed notably in the second half of last year, reflecting a confluence of factors affecting major economies. China’s growth declined following a combination of needed regulatory tightening to rein in shadow banking and an increase in trade tensions with the United States.

“The euro area economy lost more momentum than expected as consumer and business confidence weakened and car production in Germany was disrupted by the introduction of new emission standards; investment dropped in Italy as sovereign spreads widened; and external demand, especially from emerging Asia, softened.

“Elsewhere, natural disasters hurt activity in Japan. Trade tensions increasingly took a toll on business confidence and, so, financial market sentiment worsened, with financial conditions tightening for vulnerable emerging markets in the spring of 2018 and then in advanced economies later in the year, weighing on global demand.

Conditions have eased in 2019 as the U.S. Federal Reserve signaled a more accommodative monetary policy stance and markets became more optimistic about a U.S.–China trade deal, but they remain slightly more restrictive than in the fall.”

What a nasty picture, certainly in highcontrast to the domestic economic outlook. If we could get a decent trade deal — sparks might just fly.

May/June 2019