Manufacturing Growth Will Be Smaller In First Quarter 2007

Rate will be 2.5% versus 4.7% in 2006.

Overall, manufacturing will still grow in 2007, but at a reduced 2.5% rate compared to 4.7% in 2006, according to Manufacturers Alliance/MAPI Quarterly Industrial Outlook released on March 8. The Alliance forecasts 3.1% growth in manufacturing in 2008.

"The EPA diesel emissions regulations and Microsoft's introduction of a new operating system and Office 2007 will distort purchasing in 2007, excessive inventories are now being drawn down, and major end markets for manufacturing (housing and motor vehicles) are declining in 2007," said Daniel J. Meckstroth, Ph.D., Manufacturers Alliance/MAPI chief economist and author of the analysis. "Fortunately, these issues will not be present next year."

There was some good news however from the production equipment categories measured by the study. Four of the seven experienced year-over-year double-digit growth in fourth quarter 2006. Industrial machinery grew 20%, while construction machinery grew 17%. Mining and oil and gas field machinery grew 15% and engine, turbine and power equipment saw an 11% growth.

Other top industry performers in the fourth quarter were aerospace products and parts (17%); oil and gas well drilling (15%); communications equipment (14%); basic chemicals (10%); and electrical equipment (10%).

The MAPI forecast predicts two industries will see double-digit growth. Aerospace products and parts should grow by 13% in 2007 and by 14% in 2008, while computer equipment should increase by 11% each year.

The Semiconductor Industry Association envisions semiconductor shipments to increase by 10% in 2007 and 11% in 2008.

One industry in the equipment sector is forecast to have negative change: construction machinery is expected to decline by 2% in 2007 and by 4% in 2008.

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