MAPI: Trends Suggest Optimism for U.S. Economy and Manufacturing Sector
11 Apr, 2013
Recent trends suggest a reason for optimism for the U.S. economy and its manufacturing sector, according to the quarterly Manufacturers Alliance for Productivity and Innovation U.S. Industrial Outlook (EO-121), a report that analyzes 27 major industries.
While GDP declined at a 0.1 percent rate in the fourth quarter of 2012, manufacturing output grew at a 1.9 percent rate.
MAPI forecasts that industrial production will increase 2.2 percent in 2013, an increase from 2.0 percent in the December 2012 forecast. A further pickup is likely in 2014, with growth anticipated to be 3.6 percent, above the 3.2 percent in the previous report. Manufacturing production should outperform GDP growth, which MAPI estimates will be 1.8 percent in 2013 and 2.8 percent in 2014.
“Despite some austerity measures, there are several reasons to be optimistic about continued economic growth in 2013 and 2014,” said MAPI Chief Economist Daniel J. Meckstroth, Ph.D., author of the analysis. “One is that consumer deleveraging is close to an end. Consumers have refinanced, defaulted, or restructured mortgage debt and paid down installment debt. Households have the capacity to use more credit, and loans are available for creditworthy households. In addition, the housing market is showing definitive improvement, particularly on the supply side.”
The report offers economic forecasts for 24 of the 27 industries. MAPI anticipates that 16 of these will show gains in 2013, and 8 will decline. Housing starts should see a 24 percent increase while aerospace products and parts production is forecast to advance by 10 percent. The outlook improves in 2014, with growth likely in 23 of 24 industries, led by housing starts at 34 percent. Public works construction is the lone industry expected to decline in 2014, by 1 percent.
According to the report, non-high-tech manufacturing production (which accounts for 90 percent of the total) is anticipated to increase 1.8 percent in 2013, the same as in the previous forecast, and increase by 3.8 percent in 2014, a slight gain from 3.7 percent in the December analysis. High-tech industrial production (computers and electronic products) is projected to expand by 4.3 percent in 2013, an improvement from 3.0 percent growth anticipated in MAPI’s December report. An upswing to 9.0 percent growth is forecast for 2014, an increase from 8.3 percent in the previous outlook.
Seventeen of the 27 industries MAPI monitors had inflation-adjusted new orders or production above the level of one year ago (two more than reported last quarter), 8 declined, and 2 were flat. Housing starts grew by 27 percent in the three months ending January 2013 compared with the same period one year earlier, while construction machinery improved by 16 percent in the same time frame.
The largest drop came in electronic computer shipments, which declined by 34 percent.
Meckstroth reported that 6 industries are in the accelerating growth (recovery) phase of the business cycle; 11 are in the decelerating growth (expansion) phase; 6 are in the accelerating decline (either early recession or mid-recession) phase; and 4 are in the decelerating decline (late recession or very mild recession) phase.