2012 ends with growth in manufacturing, uncertainty for small businesses in USA

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    By NVONews.Com Correspondent

    Fears of “fiscal cliff” and subsequent threat of fresh recession notwithstanding manufacturing sector ended on an upswing in the USA in 2012. However, uncertainty remained for smaller businesses.

    After slowdown in November, especially after Oct 29-30, 2012 devastating Super-storm Sandy, factories returned to growth in December after contracting in the previous month.

    According to the Institute for Supply Management’s (ISM’s) index national factory activity rose to 50.7––up from 49.5 in November 2012. The ISM index had fallen to a 40-month low in November 2012.

    Its employment index rose to 52.7 from 48.4 in November, while its forward-looking new orders component kept at 50.3.

    However, after the Senate nd House of Representatives have come to an agreement on fiscal cliff, experts hope that new orders and overall activity in the manufacturing sector would accelerate further.

    But Thomas Simons, vice president and money market economist at New York brokerage Jeffries, is of the view that “we also expect that growth in the first quarter will be slow due to continued uncertainty over spending cuts and the debt ceiling.”

    Financial data firm Markit’s US Manufacturing Purchasing Managers Index, another measure of manufacturing also showed growth picked up to 54.0 from 52.8 in November. This was its highest point since May on a final basis despite narrowly missing its preliminary estimate of 54.2.

    Said Markit’s Chief Economist Chris Williamson: “With recent indications that growth is also picking up in other key economies around the world, notably in emerging markets such as China and Brazil, and that the euro zone’s economic crisis is easing, U.S. companies should benefit as stronger demand lifts exports in early 2013.”

    Rise in new orders fuelled the faster growth, as 20 per cent companies reported an increase. The Markit index’s new orders component rose to 54.7 from 53.6 in November, its quickest increase since April.

    Notwithstanding growth in manufacturing sector, uncertainty remained for smaller businesses. Borrowing by small US businesses rose marginally in November.

    According to the Thomson Reuters/PayNet Small Business Lending Index, (which measures the overall volume of financing to small US companies) rose to 108.3 from a downwardly revised 107 in October.

    Small businesses were waiting for more consumer activity to emerge. They are keeping their fingers crossed.