Manufacturing growth will exceed growth of overall economy

Source: Material Handling Industry of America

Dec 30, 2009

Long-awaited growth is finally poised to return to the U.S. economy, albeit at a far more modest rate than the typical recovery from previous recessions, according to a new report by the Manufacturers Alliance. The organization predicts that inflation-adjusted gross domestic product (GDP) will decline 2.5% in 2009 before rebounding to 2.4% growth in 2010 and by 3.5% in 2011.

Manufacturing production growth is expected to decline 11.3% this year before rebounding to 4.6% growth in 2010 and to 6.0% growth in 2011.

Production in non-high-tech industries is expected to decline by 11.3% in 2009 before increasing by 2.3% in 2010 and by 5.8% in 2011. The computers and electronics products sector will also see a drop-off this year, declining by 9.4%. High-tech manufacturing production, however, is expected to improve markedly, to 15.9% growth in 2010 and by a healthy 17.5% growth in 2011.

The expenditure category for inflation-adjusted investment in equipment and software is likely to decrease by 17.2% in 2009, before experiencing 9.1% growth in 2010 and 15.2% growth in 2011. Capital equipment spending in high-tech sectors will continue the trend. Inflation-adjusted expenditures for information processing equipment are expected to fall 6.5% in 2009 before rising by 6.9% in 2010 and by 7.8% in 2011.

The forecast expects industrial equipment expenditures to decline by a severe 22.7% this year. The spending will recover, however. MAPI predicts 3.5% growth in 2010 and a significantly improved 22.6% growth in 2011. The outlook for spending on transportation equipment is for excessively wide swings in either direction. The analysis projects a 49.6% decline in 2009, followed by a 55.2% increase in 2010 and a 46.7% advance in 2011.

Spending on non-residential structures is expected to retrench over the next two years, declining by 18.3% in 2009, and by an additional 16% in 2010 before seeing growth of 1.1% in 2011.

Exports and imports will both experience a substantial downturn in 2009 before recovering. Inflation-adjusted exports are anticipated to decrease by 10.8% in 2009 before rebounding to 7.6% growth in 2010 and to 9.5% growth in 2011. Imports are expected to decline by 14.5% this year, to increase by 8.3% in 2010, and to further increase by 6.3% in 2011. The employment outlook, unfortunately, will continue to pose a challenge. MAPI forecasts unemployment to average 9.2% in 2009, 10% in 2010, and 9.1% in 2011.

The price per barrel of imported crude oil is expected to average $59.10 in 2009 before heading upward to $69.80 per barrel in 2010 and to $73.50 per barrel in 2011. While high by historical standards, this still compares favorably to the average $92.30 price per barrel in 2008.

Included in MAPI’s November 2009 economic outlook is the annual long-term forecast. Average annual GDP growth from 2010-2014 is expected to be 3.1%, including a peak growth annual high of 4% in 2012.

Show Comments
Hide Comments

Join the discussion

We welcome your thoughtful comments.
All comments will display your user name.

Want to participate in the discussion?

Register for free

Log in for complete access.

Comments

No one has commented on this page yet.

RSS feed for comments on this page | RSS feed for all comments