Monday, May 02, 2011

Manufacturing Remains Strong

It finally appears that the recovery may be gaining some traction. As I mentioned in my previous post, construction was up in march. Today, The Institute for Supply Management stated that the PMI remains over 60 for the fourth consecutive month. This is good. The manufacturing industry is a critical component of the US economy, who is still the biggest manufacturer in the world.

To make things even more attractive, there is probably also a spillover effect to other industries. This is because manufacturing companies themselves need the services and products of other companies - and so on.  Ultimately, this means an increase in demand for business financing products because growing companies usually need money. The catch is that although financial institutions are lending more - they are not lending a lot and they are very careful about who they lend to. This will create an opportunity for companies that offer alternative financing, such as invoice factoring.

Usually, factoring and purchase order financing are used by emerging companies that don't qualify for conventional business financing. One can assume that financing activity in the industry will increase, at least for the short term.