Huether Reports Rising Exports Helping Offset Housing Downturn

The recent report from the Federal Reserve that manufacturing production showed no change in September after edging down 0.4% in August does not accurately reflect what is going on in manufacturing, according to David Huether, chief economist of the National Association of Manufacturers.

"While overall manufacturing activity was flat last month, there's an awful a lot of activity under the surface," Huether says. "The ongoing downturn in housing continues to impact some segments of manufacturing, evidenced by the fact that wood products, nonmetallic minerals, furniture, and textile product production all fell last month. Also, the disruptive strikes in the auto industry were a major cause of the 3.3% drop in motor vehicle production last month."

But outside of motor vehicles, manufacturing production rose a solid 0.3% in September, with solid gains taking place in primary and fabricated metals, computers and electronics, electrical equipment, aerospace, medical equipment, and chemicals, Huether says.

"Overall, manufacturing production rose at a healthy 4.3% annual rate in the third quarter of the year. This is an encouraging sign for the overall economy and signals that despite the recession in the housing market, the overall expansion remains on track. The fact that business equipment production rose at an annual rate of 7% in the third quarter, the fastest pace in a year, signals that business investment and capital goods exports are continuing to propel the economy forward.

"With export growth helping to offset the housing recession, it should be clear that encouraging exports by lowering overseas trade barriers would be a nobrainer," Huether explains. "Currently, there are four free trade agreements waiting to be approved by Congress. We hope that Congress will act in the interest of American's manufacturing base and pass them."