MAPI: Manufacturing To Improve In 2010, 2011

ARLINGTON, Va. -- Manufacturing saw a resurgence in the third quarter of 2009, as production increased at an 8 percent annual rate, but the general economic and industrial recovery will struggle to maintain that pace of growth, according to a Manufacturers Alliance/MAPI report.

“Certainly the huge fiscal and monetary stimulus is compensating for the deleveraging of the American consumer and has helped some of the most depressed industries in the economy, like autos and housing, but the most important reason may be that the worst of the inventory destocking is ending,” said Daniel J. Meckstroth, MAPI Chief Economist. “There are, however, cautionary flags that may dampen the recovery.  For instance, job losses will continue through mid-2010; there is relatively little, if any, wage growth; credit is difficult to obtain without stellar credit scores; housing prices may fall further; and consumers are repaying debt and building a cash cushion.”

MAPI expects manufacturing production to drop 11 percent in 2009 before recovering to 5 percent growth in 2010 and 6 percent growth in 2011.

Non-high-tech manufacturing fell 8 percent in the third quarter of 2009. MAPI expects it to decline 11 percent this year prior to increasing 2 percent in 2010 and 6 percent in 2011.

High-tech industrial production rose 5 percent in the third quarter, but MAPI predicts it will decline 9 percent in 2009 before rebounding to 16 percent growth in 2010 and 18 percent growth in 2011.

The manufacturing sector should begin to rebound in 2010, with MAPI forecasting 18 of 24 industries to show gains, led by housing starts with a 56 percent rebound from historically low levels, and two will remain flat.  The turnaround should continue in 2011 with growth likely in 23 of 24 industries, including seven by double digits, led by housing starts at 44 percent and engines, turbines and power transmission equipment at 24 percent.

For additional information, visit www.mapi.net