Manufacturing is at the center of the U.S. economy. This sector is highly connected to other sectors such as transportation, mining, retail, utilities, and business services. Data from the Institute of Supply Management’s Manufacturing Index (ISM) indicates that manufacturing activity recently reached its highest level in 16 months, which indicates an expanding economy. One of the key drivers of growth in the manufacturing sector is the strength of the U.S. consumer. Increased levels of consumer confidence and consumer spending remain high, most noticeably in the automobile sector where automobile sales hit a record high in 2015. Manufacturing companies have also begun to leverage technology such as cloud ERP systems, analytics software, and 3D printing to increase efficiency.


Value of Closed Domestic M&A Transactions ($mm)


Sector Performance vs. National GDP

Although manufacturing activity has increased in recent months, a number of U.S. manufacturers remain uncertain about the U.S. economy in the next 12 months. The dollar is expected to appreciate and demand from important foreign markets, such as China, is expected to significantly decline. This heightened sense of caution has led to an overall conservative approach towards hiring, capital spending, and geographic expansion as teams look to preserve liquidity. However, this uncertainty has not stopped recent transactions such as Honeywell’s acquisition of Intelligrated and H-D Advanced Manufacturing’s acquisition of Numeric Machine. These transactions indicate that companies that have created unique manufacturing and engineering processes remain highly valued in this environment.

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