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2008 Expected To Be Stronger Year For Manufacturing

Manufacturing growth had dropped from 4.7 percent in 2006 to 2 percent in 2007, but is expected to rebound to 2.9 percent in 2008.

ARLINGTON, Va. — Manufacturing growth is expected to decelerate in 2007, but 2008 should see an improvement, according to the Manufacturers Alliance/MAPI.
Manufacturing industrial production grew at a 3.9 percent annual rate in the second quarter 2007, significantly higher than the 0.8 percent in the first quarter.
For the year as a whole, manufacturing growth is expected to slow from the 4.7 percent in 2006 to 2 percent in 2007, and then rebound to 2.9 percent in 2008.
“An improvement in manufacturers’ exports in most industries and the end of an inventory drawdown explains the bounce back in second quarter industrial activity,” said Daniel J. Meckstroth, Manufacturers Alliance/MAPI Chief Economist. “Unfortunately, the manufacturing sector cannot completely shake off the depressing effect of the housing collapse and the downward drifting motor vehicles market. Furthermore, we no longer look to strong business investment to lead economic growth.”
In the second quarter, 14 of the 27 industries tracked by the Manufacturers Alliance/MAPI had new orders or production above year-ago levels, down from 16 in the previous quarter.
Six industries had double-digit year-over-year growth. Electrical equipment and mining and oil and gas field equipment each saw 13 percent growth. Aerospace products and parts, communications equipment, industrial machinery, and private non-residential construction all grew by 12 percent.
Housing activity fell 22 percent, while construction machinery dropped 13 percent.
MAPI predicts two industries will see double-digit growth in 2007 and 2008 — mining and oil and gas field machinery, with 12 percent in 2007 and 11 percent in 2008; and aerospace products and parts, with 11 percent each year.
Communications equipment should see 14 percent growth in 2007, and 8 percent in 2008. Electrical equipment should grow 12 percent this year, but dip 1 percent in 2008.
Housing is expected to drop 23 percent in 2007 and by 6 percent in 2008. The household appliance sector should drop 5 percent this year and 6 percent in 2008. Construction machinery should slip 15 percent in 2007 and 7 percent next year.
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