U.S. manufacturing activity is decelerating but should continue to grow modestly next year, the Manufacturers Alliance/MAPI reported in its quarterly report on the outlook for 27 major industries.
“Despite the recent deceleration in the pace of growth, the industrial recovery is stronger than the recovery in the general economy,” said Daniel J. Meckstroth, the alliance’s chief economist and the author of the analysis.
“The pace of consumer spending is improving due to marginal employment growth and modest wage increases, and the prolonged downturn and sluggish recovery has created pent-up demand for some durable goods,” Meckstroth said. “In addition, business equipment and software spending is expected to be an important source of growth while exports should grow faster than imports.”
Manufacturing industrial production, measured on a quarter-to-quarter basis, grew at a 3 percent annual rate in the three months ending in October 2010 after expanding at an 8 percent annual rate in the three months ending July 2010. MAPI forecasts that manufacturing production will increase 4 percent in 2011 and advance 5 percent in 2012.
MAPI said 22 of the 27 industries it monitors had inflation-adjusted new orders or production above the level of a year ago, the same number as reported for the quarter ending in July. The largest drop came in private nonresidential construction, which declined 23 percent.
The report said 19 of the 24 industries for which MAPI offered a forecast for 2011 will show gains, led by housing starts with expected 34 percent growth, albeit from extremely depressed levels, followed by engine, turbine and power transmission equipment with 16 percent growth. The recovery should continue in 2012 with growth likely in 23 of 24 industries, including seven industries which are predicted to grow at double-digit rates, again led by housing starts at 53 percent, and engine, turbines and power transmission equipment at 18 percent. Public works construction is the only industry anticipated to decline, by 2 percent, in 2012.
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