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Manufacturing Takes A Hit Thanks To Government Shutdown

Written by Ken Gaebler
Published: 10/31/2013

U.S. manufacturing output dropped for the first time in four years, likely due to fallout from the government shutdown in the first half of October.

The impact of the shutdown of the U.S. government during the first two weeks of October had a ripple effect on many different sectors of the economy, including manufacturing. Citing recently released data, Reuters has reported that U.S. manufacturing output fell for the first time in four years, most likely due to the government shutdown.

Impact of Government Shutdown on US Manufacturing Industry

While U.S. factory output contracted for the first time since 2009, China amped up production this month, surpassing both the U.S. and Europe, which also reported slower manufacturing growth in October.

According to Markit chief economist Chris Williamson, data "suggests that the disruptions and uncertainty caused by the crisis hit companies hard," although evaluating the full impact of the government shutdown is difficult.

October manufacturing levels delivered a harsh reality check to industry forecasts and analysts, many of which had predicted strong manufacturing growth during throughout the fourth quarter. In a recent Reuters poll, economists forecasted 2.3 percent growth in Q4, compared to 2.5 percent growth in Q3.

In contrast, China is on track to achieve its targeted annual growth rate of 7.5 percent. However, it's important to note that even if China hits its 2014 target, it will represent that nation's lowest growth rate in 14 years, signaling a slowdown in Asia's regional economies.

For small businesses in manufacturing and other sectors, effective goal setting is a precursor to success. But when unexpected and uncontrollable events like government shutdowns occur, it can suddenly become impossible to execute strategic plans and to achieve forecasted goals.

Businesses across all industries are sometimes forced to contend with unforeseen events. But the key takeaway for small business owners may be that despite the value of strategic planning, it is just as important to maintain a nimble business philosophy that allows your company to quickly adapt to changes in the marketplace -- whatever those changes may be.

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