MAPI Forecast Points To Improved Growth

Of the 27 industries tracked by the Manufacturers Alliance/MAPI, 16 see a rise over year-ago levels for new orders or production; Three percent growth rate expected for the second quarter.

ARLINGTON, Va. - The Manufacturers Alliance/MAPI said Thursday that despite a soft beginning, the remainder of 2007 should see an improvement in the U.S. economy.

According to the Quarterly Industrial Outlook, manufacturing industrial production grew at a 0.9 percent annual rate in the first quarter, but should grow at a 3 percent rate for the second quarter.

For the year, manufacturing production growth is expected to slow from 4.7 in 2006 to 2.1 percent in 2007, then rebound to 3.3 percent for 2008.

“The manufacturing inventory correction is over, the inexplicable decline in exports has passed, the January 1, 2007, EPA diesel engine emissions regulation is in effect, and the worst of the housing collapse has occurred,” said Daniel J. Meckstroth, Ph.D., Manufacturers Alliance/MAPI Chief Economist. “As long as the general economic expansion continues, conditions in manufacturing will improve.”

Sixteen of the 27 industries covered by the report had inflation-adjusted new orders or production above year-ago levels, down slightly from the 18 industries reporting growth last quarter.

There were no standout sectors, but industries seeing double-digit year-over-year growth included: communications equipment with 20 percent; navigation, measuring, electromedical and control instruments with 17 percent; aerospace products and parts with 14 percent; and industrial machinery with 14 percent.

Consumer-oriented industries were the weakest sector, as housing activity dropped 31 percent in the first quarter. Ventilation, heating, air conditioning and commercial refrigeration equipment slipped 11 percent.

According to Meckstroth, six industries are in the accelerating growth (recovery) phase of the business cycle, 11 are in the decelerating growth (expansion) phase, five are in the accelerating decline (early recession or mid-recession) phase, and five are in the decelerating decline (late recession or very mild recession) phase.

Breakdown of industries by business cycle phase.
Source: MAPI
To view diagram larger, click diagram.


MAPI expects aerospace products and parts to experience double-digit growth 2007 and 2008, growing 14 percent each year. Communications equipment is expected to grow 17 percent in 2007 and 9 percent in 2008. Mining, oil and gas field machinery should see a 5 percent growth rate for 2007, with a stronger showing in 2008 at 12 percent.

Construction machinery is forecast to slip 9 percent in 2007 and 1 percent in 2008. The household appliance industry is expected to see a 9 percent drop in 2007 and a 3 percent drop in 2008.