Increasing income and consumption in the U.S. will spur moderate growth in manufacturing through 2015. That's the outlook forecast by the Manufacturers Alliance for Productivity and Innovation in its fourth-quarter economic report issued today.
In its report, MAPI predicts that inflation-adjusted GDP will expand 2.6% in 2014 and 3.2% in 2015. The alliance has adjusted both of those forecast figures down slightly—by 0.2% each—since its last quarterly report in September.
Manufacturing production is expected to outpace the rest of the economy; production will grow 3.1% in 2014 and 4.1% in 2015, according to MAPI.
Over the next five years, GDP will grow by an annual average of 3.0%, and manufacturing production will grow by an annual average of 3.4%, MAPI predicts.
"This is reasonably good forecast," MAPI Chief Economist Daniel Meckstroth said. "The worst is over, and we'll accelerate from here through 2016."
He cautioned, however, that "there will be a speed limit moving ahead" and "we won't see the 4% rate of growth of the past."
Durable Goods to Drive Growth
Meckstroth said the main economic drivers will be on the consumer side, particularly in durable goods. He added that housing will grow due to pent-up demand, leading to increased demand for appliances and throughout the housing supply chain; and automobile production will decelerate to a rate of moderate growth but will still advance.
Additional details from MAPI's quarterly report:
- Production in non-high-tech manufacturing industries is expected to increase 3.0% in 2014 and 4.0% in 2015. High-tech manufacturing production, which accounts for about 5% of all manufacturing, is expected to grow 6.8% in 2014 and 8.4% in 2015.
- The forecast for inflation-adjusted investment in equipment is that it will grow 7.6% in 2014 and 8.4% in 2015. Capital equipment spending in high-tech sectors will also rise. Inflation-adjusted expenditures for information processing equipment are expected to increase 10.0% in 2014 and 12.2% in 2015.
- MAPI forecasts that industrial equipment expenditures will increase 9.6% in 2014 and 7.8% in 2015. The outlook for spending on transportation equipment is an increase of 6.2% in 2014 and 3.1% in 2015. Spending on nonresidential structures is expected to increase 3.4% in 2014 and 5.4% in 2015.
- Inflation-adjusted exports will increase 4.6% in 2014 and 5.7% in 2015, according to MAPI's forecast. Imports are expected to grow 5.3% in 2014 and 6.2% in 2015. Overall unemployment will average 6.9% in 2014 and 6.3% in 2015. For the five-year period 2014 through 2018, unemployment will average 5.9%.
- Strong productivity gains and a slower rate of growth will affect prospects for manufacturing employment. The outlook is for an increase of 252,000 jobs in 2014 and 256,000 jobs in 2015. After that, a deceleration is expected. MAPI forecasts a gain of 99,000 manufacturing jobs in 2016; 28,000 in 2017; and 55,000 in 2018.
- The refiners’ acquisition price per barrel of imported crude oil will average $96 in 2014 and $93.70 in 2015, according to MAPI's forecast.