The manufacturing sector is one of the most important indicators of the health of the real economy. Manufacturers produce goods — from washing machines to cars, among others — that are in demand from consumers. Consumer demand is essential to any sustainable economic recovery.
Manufacturing also tends to be labour intensive and a pick-up in the sector is normally a good sign for job creation.
So, while it is still too early to read too much into the figures, it is a good omen for the global economy that manufacturing is picking up in the United States. The boost in manufacturing figures — along with stronger retail and construction data — is an indication that the world's largest economy is strengthening early in the new year.
However, it must be kept in mind that, especially the retail figures, have received a seasonal boost and it is not yet clear that they can be sustained.
But, it has been reported that growth in Asia and emerging markets is helping sustain orders for US goods, which shows that these economies are in relatively good health. Overall the international manufacturing data is a sign that the global economy and financial system is beginning to cope better with the dangerous volatility caused by the persistent European debt crisis.
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