"We are pleased there is growth in the overall economy and surprisingly strong growth in manufacturing," says Manufacturers Alliance/MAPI chief economist Daniel J. Meckstroth. "Yet by historical standards it is still modest compared to recoveries from past recessions."
According to Meckstroth, manufacturing production growth will grow faster than the general economy next year. While the former is expected to decline 11.3% this year, it is projected to rise 4.6% next year and 6% the year after. "An inventory swing in the goods producing sector is a major reason for the acceleration in manufacturing production," he explains. "We expect manufacturing growth to be led by high technology products, semiconductors and computers."
The organization expects production in non-high-tech industries to decline 11.3% this year but increase 2.3% next year and 5.8% the year after. The computers and electronics products sector will also see a drop-off this year, declining by 9.4%. But it is projected to improve markedly next year, showing 15.9%, followed by an even more robust 17.5% in '11.
In terms of expenditure, MAPI says inflation-adjusted investment in equipment and software is likely to decrease 17.2% in '09, then experience 9.1% growth in '10 and 15.2% growth in '11. Capital equipment spending in high-tech sectors will match the overall trend, with inflation-adjusted expenditures for information processing equipment falling 6.5% in '09 before rising 6.9% in '10 and 7.8% in '11. The forecast predicts industrial equipment expenditures will decline a severe 22.7% this year, with spending recovering to see 3.5% growth in next year and 22.6% growth the year following.
In a statistics of particular significance to owners of distribution centers, the outlook for spending on transportation equipment is especially noteworthy, say MAPI researchers, with a massive 49.6% decline in '09, followed by a 55.2% increase in '10 and 46.7% advance in '11. Exports and imports will follow a similar pattern, with exports experiencing a 10.8% decline this year before rebounding to 7.6% growth next year and 9.5% growth the year after and imports falling 14.5% this year, then rising 8.3% next year and 6.3% the year after. The one sector to break the pattern is spending on non-residential structures, which is expected to decline 18.3% in '09 and another 16% in '10. It will return to growth in '11 with a modest 1.1% gain.
The above gains are anticipated to occur despite a significant rise in the price of oil. According to the report, the price per barrel of imported crude oil is expected to average $59.10 in '09 before heading to $69.80 per barrel in '10 and to $73.50 per barrel in '11. While high by historical standards, MAPI researchers point out this still compares favorably to the average $92.30 price per barrel in '08.
The forecast was created using a macroeconomic model developed by IHS Global Insight of Lexington, MA.
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