U.S. manufacturing activity continued to face challenges in October 2024, with data showing ongoing contraction amid economic uncertainty. However, the month also brought major new factory announcements, pointing to pockets of growth. Additionally, the presidential election’s outcome will have cascading effects on the manufacturing industry going forward.
Reports from the Institute for Supply Management (ISM) and S&P Global indicated the manufacturing sector contracted for the seventh straight month based on measures like the Purchasing Managers Index (PMI). New orders, production, employment, and exports remained weak across most industries as high inflation, rising interest rates, and recession fears weighed on demand.
However, even with the downbeat numbers, October saw billions invested in new manufacturing facilities and expansions. Companies like Johnson & Johnson, First Solar, and Sierra Pacific made large commitments to new production plants, underscoring confidence in strategic American industries.
The conflicting signals of broad declines yet ongoing investment paint a complex picture of the manufacturing landscape. As the sector aims to stabilize after months of contraction, the rest of the year will indicate whether demand and output can recover or if more turbulence lies ahead. But the wave of new factories shows manufacturing innovation continues, albeit unevenly, even amid challenging times.
A Month in Data
The ISM Manufacturing PMI registered 46.5 percent in October, the lowest reading in 2024. Key sub-indexes like New Orders (47.1 percent), Production (46.2 percent), and Employment (44.4 percent) remained in negative territory. This points to ongoing weaknesses across demand, output, and jobs. The S&P US Manufacturing PMI posted 48.5 in October but was higher compared to the September reading.
The reports agree that manufacturing contracted in October, with new orders and employment declining notably. Production is more mixed but still weak in most areas. While price increases may be peaking, costs are still burdensome for manufacturers.
What the Data Means
The ISM and S&P Global PMIs both indicate the manufacturing sector contracted further in October, pointing to generalized weaknesses in demand and output.
Both signal the months of deterioration for manufacturing. The reports largely agree with measures like new orders, production, and employment remaining in contraction. Backlogs also dropped.
This data indicates manufacturers face substantial near-term headwinds around spending pullbacks from clients amid high inflation, rising interest rates, and economic policy uncertainty tied to the November 2024 presidential election. Hesitant customers have cut back on new orders and investments, forcing manufacturers to reduce production and employment. Excess capacity is apparent in shrinking backlogs.
While input cost increases may be moderating slightly, prices for raw materials and transportation remain historically high, squeezing manufacturer margins. Weaker global demand, especially from Europe, is also limiting export opportunities.
New Factory and Manufacturing Announcements
While the manufacturing sector contracted broadly in October, major new facilities show pockets of ongoing growth and investment. Significant announcements included:
Johnson & Johnson’s $2 Billion Investment in New Pharmaceutical Campus in North Carolina
Johnson & Johnson announced a major investment in a new pharmaceutical manufacturing campus in Wilson County, North Carolina. The over $2 billion investment is expected to create 420 jobs in areas like engineering, microbiology, and supply chain leadership.
First Solar’s $1.1 Billion Manufacturing Facility in Alabama
First Solar inaugurated its new $1.1 billion solar panel manufacturing facility in Lawrence County, Alabama. The state-of-the-art plant, spanning 3.5 gigawatts of production capacity, is expected to create over 800 clean energy manufacturing jobs.
Sierra Pacific Industries’ $60 Million Manufacturing Facility in Alabama
Sierra Pacific Industries opened a new $60 million, 610,000-square-foot manufacturing facility in Phenix City, Alabama that will significantly expand its capacity to produce high-end window and door products. The plant is expected to create 300 jobs by 2025.
The breadth of critical industries investing in new American production capacity underscores areas primed for growth despite recent setbacks. Manufacturing retains pockets of strength amid vulnerability.
Future Outlook
The near-term outlook for manufacturing remains murky amid persistent economic uncertainty. New orders and employment may continue contracting over the next few months as hesitation linked to the November election caps demand and output. Many firms are delaying major decisions until the political environment stabilizes.
However, the election outcome and potential for lower interest rates could reaccelerate spending and investment, serving as post-election growth drivers. President-elect Trump’s new tariff proposals could end up increasing raw material inputs but could also drive manufacturing growth. Trump may also cut corporate red tape which could additionally lead to growth.
Infrastructure initiatives and green energy incentives may also bolster manufacturing. Economists expect a gradual demand recovery allowing production and hiring to stabilize. Several promising longer-term trends may propel future expansion as well. The industry continues shifting towards high-technology and sustainable manufacturing, evident in October’s major facility investments. Areas like electric vehicles, battery production, renewable energy, aerospace, and communications tech are primed for growth.
With both current hurdles and emerging opportunities, U.S. manufacturing faces a complex balance ahead. While recovery timelines remain uncertain, American production retains fundamental strengths around innovation, technology, and market-leading capabilities that can override near-term contractions. The resilience and production announcements this past month reinforce manufacturing’s overall staying power.
