The manufacturing sector of the U.S. economy will grow slightly less than the overall economy in 2007, according to an economic forecast released this week by the Washington, D.C.-based National Association of Manufacturers (NAM).
The business group foresees 2.8% growth for the manufacturing sector next year, one-tenth of a percentage point below the 2.9% growth it is predicting for U.S. GDP. For the past two years, manufacturing growth has outpaced overall economic growth.
"A downturn in housing will continue to drag the economy throughout the first half of 2007," says David Huether, NAM's chief economist. "This translates into continued negative effects on specific manufacturing sectors: wood, and textile products and non-metallic minerals."
Business spending is expected to slow in 2007, increasing 6.4%, nearly two full percentage points less than the 8.3% increase in business investment spending thats taken place during the past four calendar quarters.
Huether expects the Federal Open Market Committee, the Federal Reserve panel that sets interest rate policy, will lower the federal funds target rate to 4.75% by mid-2007. The target rate is now 5.25%.
