A manufacturers group predicts U.S. factory production will grow 5.5 percent this year and 4.6 percent in 2012, outpacing expansion of the overall economy.
The Manufacturers Alliance/MAPI Quarterly Economic Forecast predicts inflation-adjusted gross domestic product will expand 3.2 percent in 2011 and 3 percent in 2012. MAPI’s 2011 forecast represents an increase from its previous forecast of 2.5 percent. The 2012 forecast is down slightly from the 3.2 percent growth anticipated in the alliance’s November 2010 quarterly report.
“Prospects have improved for a stronger pace of economic growth this year, but there are no home runs,” said Daniel J. Meckstroth, Manufacturers Alliance/MAPI chief economist. “Our 2011 forecast rose due to the additional, and unanticipated, tax stimulus passed at the end of last year. The 2 percent payroll deduction and business expensing provisions will pump an additional $300 billion into the economy over the next two years.
Meckstroth said the forecast calls for “an upward trend in the outlook for small business; the continuation and acceleration of new hiring, albeit at a somewhat sluggish pace, a rise in business confidence surveys, and a relatively strong export market all point to continued moderate economic growth.”
“Manufacturing production will improve because economic growth is strongest in the goods sector,” Meckstroth said. “Consumers have pent-up needs for durable goods, such as appliances and motor vehicles; business equipment demand is strong; and a more competitive dollar helps U.S. exports.”
Forecast increases by sector for 2011 and 2012 are 4.3 percent and 3.9 percent for non-high-tech industries and 14.2 percent and 15.3 percent for high-tech manufacturing, which accounts for 10 percent of manufacturing. Inflation-adjusted investment in equipment and software is forecast to grow 13.9 percent in 2011 and 9.6 percent in 2012.
MAPI expects industrial equipment expenditures to advance 19 percent in 2011 and 9.2 percent in 2012. The outlook for spending on transportation equipment is for 25.7 percent growth in 2011 and 29.4 percent in 2012. Spending on non-residential structures is expected to fall 1.8 percent in 2011 and grow 5.4 percent in 2012.
Inflation-adjusted exports are anticipated to rise 8.1 percent in 2011 and 8.7 percent in 2012. Imports are expected to grow 6.7 percent in 2011 and 5.2 percent in 2012. MAPI forecasts overall unemployment to improve somewhat, averaging 9 percent in 2011 and 8.5 percent in 2012. Manufacturing is expected to see a hiring increase with the sector forecast to add 284,000 jobs in 2011 and 400,000 jobs in 2012.
The forecasts assume the price per barrel of imported crude oil will average $88.30 per barrel in 2011 and $92 per barrel in 2012.
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