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MAPI: Manufacturing Could See Growth In ‘08

Report from the Manufacturers Alliance/MAPI points to the Fed’s decision to cut interest rates, rebate checks, and strong exports as lifelines for the industrial sector.

ARLINGTON, Va. -- Although the U.S. industrial slowdown shows few signs of tapering off, three positive factors could highlight some production growth in the second half of the year, according to the Manufacturers Alliance/MAPI.

“The manufacturing sector is in a recession, whether a recession is officially declared for the general economy or not,” said Daniel J. Meckstroth, Chief Economist for the Manufacturers Alliance/MAPI. “Yet as the housing collapse worsens, and drags with it related industries, the Federal Reserve’s actions to dramatically lower interest rates, robust rebate checks now being sent to American consumers, and continued strong net exports will lead to production growth in the second half of 2008.”

MAPI expects a slight growth in the industrial sector this year, with manufacturing production increasing 0.4 percent in 2008 before improving to 3.1 percent growth in 2009.

Manufacturing industrial production fell at a 0.6 percent annual rate in the fourth quarter of 2007, fell by 1.4 percent in the first quarter 2008, and is expected to fall at a 2.5 percent annual rate in the second quarter before returning to growth.

Inflation adjusted exports and expected to expand by 8.3 percent in 2008 and by 9.7 percent in 2009, offsetting some of the negative effects of the housing crisis.

“High tech industries such as computers, communications equipment and semiconductors continue to post double-digit volume growth and thus mitigate the more severe downturn that is occurring in non-high tech manufacturing,” Meckstroth said.

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