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Recession Seen Tightening Grip on Major Manufacturing Industries
Anemic production growth in 2008 should improve by 2009, Manufacturers Alliance/MAPI predicts; housing collapse continues to drag, but exports offering lifeline to select sectors
Arlington, VA — May 30, 2008 — While the current U.S. industrial slowdown shows few signs of abating, a trio of positive factors should highlight at least some production growth in the second half of 2008, according to the "Manufacturers Alliance/MAPI Quarterly Industrial Outlook — First Quarter 2008," a report that analyzes 27 major industries.
"The manufacturing sector is in a recession, whether a recession is officially declared for the general economy or not," said Daniel J. Meckstroth, chief economist for the Manufacturers Alliance/MAPI and author of the analysis. "Yet as the housing collapse worsens and drags with it related industries, the Federal Reserve's actions to dramatically lower interest rates, robust rebate checks now being sent to American consumers and continued strong net exports will lead to production growth in the second half of 2008."
Exports Providing "Lifeline"
On an annual basis, MAPI forecasts slight growth in the industrial sector this year. Manufacturing production is expected to increase 0.4 percent in 2008 before improving to 3.1 percent growth in 2009.
Manufacturing industrial production, measured on a quarter-to-quarter basis, declined at 0.6 percent annual rate in fourth quarter 2007, fell by 1.4 percent in first quarter 2008, and is further expected to decline at a 2.5 percent annual rate in second quarter 2008 before resuming growth.
Exports, though, could provide a bit of a lifeline. According to MAPI's previously released quarterly economic forecast, inflation adjusted exports are expected to expand by 8.3 percent in 2008 and by 9.7 percent in 2009, partially offsetting some of the negative effects of the housing crisis.
"High tech industries such as computers, communications equipment and semiconductors continue to post double-digit volume growth and thus mitigate the more severe downturn that is occurring in non-high tech manufacturing," Meckstroth said.
"The manufacturing sector is in a recession, whether a recession is officially declared for the general economy or not," said Daniel J. Meckstroth, chief economist for the Manufacturers Alliance/MAPI and author of the analysis. "Yet as the housing collapse worsens and drags with it related industries, the Federal Reserve's actions to dramatically lower interest rates, robust rebate checks now being sent to American consumers and continued strong net exports will lead to production growth in the second half of 2008."
Exports Providing "Lifeline"
On an annual basis, MAPI forecasts slight growth in the industrial sector this year. Manufacturing production is expected to increase 0.4 percent in 2008 before improving to 3.1 percent growth in 2009.
Manufacturing industrial production, measured on a quarter-to-quarter basis, declined at 0.6 percent annual rate in fourth quarter 2007, fell by 1.4 percent in first quarter 2008, and is further expected to decline at a 2.5 percent annual rate in second quarter 2008 before resuming growth.
Exports, though, could provide a bit of a lifeline. According to MAPI's previously released quarterly economic forecast, inflation adjusted exports are expected to expand by 8.3 percent in 2008 and by 9.7 percent in 2009, partially offsetting some of the negative effects of the housing crisis.
"High tech industries such as computers, communications equipment and semiconductors continue to post double-digit volume growth and thus mitigate the more severe downturn that is occurring in non-high tech manufacturing," Meckstroth said.
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