Manufacturing production will outpace the overall U.S. economy over the next 18 months, according to a new quarterly economic forecast from the Manufacturers Alliance for Productivity and Innovation (MAPI).
Manufacturing production is expected to grow 3.2% in 2014 and 4.0% in 2015, MAPI forecasts. That compares with U.S. GDP projections of 2.5% in 2014 and 3.2% in 2015.
MAPI said manufacturing growth will be led more by investment than by consumer-driven advances over the next 18 months.
MAPI’s estimate follows other economic forecasts which have scaled back U.S. growth for 2014 due to the effects of severe weather on the first half of the year. On June 10, the World Bank predicted that the U.S. economy will grow 2.1% this year, down from its January prediction of 2.8% growth, and would accelerate to 3.0% in 2015.
“While consumer-driven manufacturing will grow at a consistently moderate rate, the industries driven by investment will grow at a higher rate,” predicted MAPI Chief Economist Daniel J. Meckstroth. “Energy infrastructure and manufacturing machinery will see increases as firms replace and expand equipment. Aerospace will also experience a big ramp-up in production. In addition, there will be growth in the construction supply chain—HVAC, wood, paint, appliances, and furniture—as we anticipate both residential and nonresidential increases. The acceleration driver will be investment.”
Non high-tech manufacturing should grow 2.9% in 2014 and 3.7% in 2015, MAPI said. High-tech manufacturing, which accounts for about 5% of all manufacturing, will grow much quicker, by 6.6% in 2014 and 10.0% in 2015.
Investment in equipment will growth 5.2% in 2014 and 10.3% in 2015, MAPI forecast. Expenditures for information processing equipment are anticipated to increase 2.7% in 2014 and a strong 14.6% in 2015.
MAPI expects industrial equipment expenditures to advance 8.1% in 2014 and 10.8% in 2015. The outlook for spending on transportation equipment is for growth of 5.6% in 2014 and 3.9% in 2015. Spending on nonresidential structures is anticipated to improve by 4.2% in 2014 and by 5.1% in 2015. Residential fixed investment is forecast to increase by 4.1% this year and a robust 19.9% in 2015.
“We anticipate 1.03 million housing starts in 2014 and 1.40 million starts in 2015,” MAPI’s Meckstroth said. “Manufacturing production will finally approach its 2008-2009 pre-recession peak by the end of 2014.”
Exports are anticipated to increase 3.0% in 2014 and 5.1% in 2015. Imports are expected to grow 2.1% in 2014 and 6.8% in 2015.
MAPI also scaled backs its forecast for manufacturing employment growth in 2014, from the 365,000 jobs predicted in March to 158,000. However, it boosted its jobs projection for 2015 from an increase of 197,000 jobs to 212,000 jobs.
MAPI forecast overall unemployment to average 6.4% in 2014 and drop to 5.9% in 2015.