What's going on?

American manufacturers have been working hard this summer, according to a report on US industrial output released on Friday � and it�s yet another sign that the American economy is picking up momentum!

What does this mean?

According to the report, American manufacturing grew in August at its fastest pace in over six years � that�s encouraging news for the American economy, partly because manufacturers (who tend to pay relatively well) are hiring more workers.

However, data on employment in the economy as a whole (also released on Friday) showed that fewer jobs were added to the US economy in August than expected. Job growth does appear to be slowing relative to recent years, which could be a sign that the overall economy isn�t quite as upbeat as it appears to be.

Why should I care?

For markets: Investors appeared to shrug off the jobs data and focus on the manufacturing report.


The dollar rose against other major currencies on Friday, suggesting that investors became modestly more confident in the US economy (investors tend to buy the currencies of economies that are performing relatively well; why? click here). The jobs data is often revised (especially the report released in August), and so investors may have been skeptical of its accuracy.

The bigger picture: The American economy seems to be accelerating, but there are still some concerns.


If manufacturers were to keep up August�s pace of business, industrial output in America would grow by over 4% per year � more than twice as much as last year! On top of that, the much larger �services� sector (manufacturing only accounts for about 10% of the US economy) appears to be growing relatively well too. However, as Friday�s jobs data showed, all this improvement hasn�t been strong enough to push up wages significantly. In many ways, that�s the key missing ingredient to today�s ongoing economic recovery.