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MAPI: Manufacturing Recession Intensifies

Production cuts in the auto industry and continued trouble in housing-related industries is dragging down the sector, according to Manufacturers Alliance/MAPI.

ARLINGTON, Va. -- The U.S. manufacturing recession continued its downward trend in the second quarter and medium-term prospects indicate only a slight improvement, according to the Manufacturers Alliance/MAPI.

"Automakers drastically cut production in the second quarter to clear out bloated stocks, and housing-related industries continued to reel from the gloom in residential construction," said Daniel J. Meckstroth, Ph.D., Chief Economist for the Manufacturers Alliance/MAPI and author of the analysis. "The declines in these major manufacturing industries directly and indirectly, depress many other industries in the sector."

Manufacturing production is expected to fall 0.5 percent in 2008 before improving to 1.6 percent growth in 2009. Manufacturing industrial production declined at a 1 percent annual rate in first quarter 2008 and at a 3.9 percent rate in the second quarter.

"High tech industries such as computer, communications equipment, and semiconductors continue to post double-digit unit volume growth and thus helped cushion a more severe downturn that occurred in non-high tech manufacturing," Meckstroth said.

Non-high tech manufacturing production declined at a 5.2 percent annual rate in the second quarter and is expected to decline 1.8 percent overall in 2008.

Eleven of the 27 industries tracked in the MAPI report had inflation-adjusted new orders or production above the level of one year ago. Fourteen had production below that level, and two remained flat.

Communications equipment (21 percent), mining and oil and gas field machinery (15 percent), private non-residential construction (13 percent), and aluminum and alumina (11 percent) saw strong double-digit growth year-over-year in the second quarter.

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