The Great Reversal: Playing the U.S. Manufacturing Boom

In previous years, investors have favored emerging markets such as China. However, there is another growing manufacturing center that is worth paying attention to. It is the United States, where a long industrial decline might be in reverse. In March alone, the manufacturing industry created 37,000 new jobs and expanded for the 32nd straight month. The manufacturing industry shared 26% of the economy’s GDP back in 1947. In 2009, that percent fell to 11%. However, in 2010, it rose to 11.7%, which was the largest yearly gain in over 50 years.

Companies like Caterpillar, Ford, Motor, and NCR say they are shifting operations back to the U.S for numerous reasons. First off, foreign market wages, while still lower than U.S. wages, are on the rise as well as high oil prices. As a result, shipping is more expensive so companies will be at an advantage if they can create goods in the U.S. Secondly, the depreciation of the U.S. dollar has increased the desire for U.S. goods in foreign markets. Finally, energy production is booming in the U.S. and natural gas prices have decreased significantly. The lower cost of natural gas benefits many U.S. producers who need steel, machinery, and chemicals.

Although a spike in the dollar, price of natural gas, and wages could slow down manufacturing, experts believe that is highly unlikely. Wall Street experts expect the manufacturing sector to increase 9% during this year. The price for natural gas is down to just $2.089 on Nymex, which is a relative minimum. Any company that uses natural gas is currently