The skill to safely navigate the hazards of power and the powerful |
2 0 0 0 T i m e s . c o m |
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Industry -- Home & Abroad |
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U.S. Quarterly Industrial Outlook: Rough Ride in 2008 Precedes Anticipated Rebound in 2009 A worsening housing collapse continues to depress related industries, making for turbulent times in the U.S. manufacturing sector in 2008. Any gloom this year, however, should give way to a rebound in 2009, according to the Manufacturers Alliance/MAPI Quarterly Industrial Outlook (ER-650e), a report that analyzes 27 major industries. Housing starts were down 26 percent in the fourth quarter of 2007. They are expected to plummet another 33 percent in 2008, bottoming out in the second quarter as the United States remains "in the midst of the most severe housing downturn anyone could have imagined," according to Daniel J. Meckstroth, Ph.D., Chief Economist for the Manufacturers Alliance/MAPI, and author of the analysis. Conversely, the longer term outlook looks much brighter, with a 32 percent increase in the rate of growth in housing expected for 2009, albeit from an extremely low base.
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On an annual basis, MAPI forecasts only slight growth in the industrial sector this year. Manufacturing production is expected to increase 0.5 percent in 2008 before rebounding to 3.4 percent growth in 2009. "Any recession is bad news for manufacturing; however, the structure of the current downturn is concentrated in finance, real estate, and construction and not on manufacturing intensive demand such as business equipment and exports," Meckstroth said. "Furthermore, the reduction in consumer spending may well hurt foreign imports more than domestically produced items." Prevailing weakness in manufacturing was evident in the 2007 fourth quarter figures. Thirteen of the 27 industries tracked in the report had inflation-adjusted new orders or production above the level of one year ago, equal to the previous quarter. Eleven industries had production below the level of one year ago, and three remained flat. Seven industries enjoyed strong, double-digit year-over-year growth in the fourth quarter, led by mining and oil and gas field machinery at 31 percent; communications equipment, and aerospace products and parts each grew at 15 percent; steel at 13 percent; electronic computer equipment, and electrical equipment each at 12 percent; and private non-residential construction enjoyed 10 percent growth. The largest drop came in the consumer goods and housing industries and equipment industries. In addition to the aforementioned 26 percent drop in housing, construction machinery production declined by 20 percent, and engine, turbine, and power transmission production fell by 10 percent.
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Meckstroth concludes that five industries are in the accelerating growth (recovery) phase of the business cycle; 11 are in the decelerating growth (expansion) phase; nine industries appear to be in the accelerating decline (either early recession or mid-recession) phase; and two are in the decelerating decline (late recession or very mild recession) phase of the cycle. The report also offers economic forecasts for 24 of the 27 industries for 2008 and 2009. This year should be particularly challenging for the manufacturing sector with MAPI forecasting only 10 of 24 industries to show growth, led by mining and oil and gas field machinery at 22 percent growth, and aerospace products and parts improving by 11 percent. In 2009, though, a solid turnaround should occur with 20 of 24 industries expecting growth, and two industries remaining flat. While 2008 should see continued declines, housing starts should improve markedly in 2009, with anticipated growth of 32 percent. Aerospace products and parts is expected to continue its strong showing with a forecast of 11 percent growth in 2009. Predictions are for only one industry to experience negative change in both 2008 and in 2009. Electric lighting equipment is forecast to decline by 4 percent in 2008 and by 1 percent in 2009
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