The Manufacturers Alliance/MAPI Quarterly Economic Forecast predicts that inflation-adjusted gross domestic product (GDP) will expand by 3.2% in 2011 and by 3% in 2012.
"Prospects have improved for a stronger pace of economic growth this year, but there are no home runs," said Daniel J. Meckstroth, chief economist, Manufacturers Alliance/MAPI."Our 2011 forecast rose due to the additional, and unanticipated, tax stimulus passed at the end of last year. The 2% payroll deduction and business expensing provisions will pump an additional $300 billion into the economy over the next two years. 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 outpace the overall economy and is expected to show 5.5% growth in 2011 and 4.6% growth in 2012.
"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."
Highlights of the survey include:
- Production in non-high-tech industries is expected to increase by 4.3% in 2011 and by 3.9% in 2012.
- High-tech manufacturing production, which accounts for approximately 10% of all manufacturing, is anticipated to improve at a much higher rate, with solid 14.2% growth in 2011 followed by 15.3% growth in 2012.
- Investment in equipment and software is for 13.9% growth in 2011 and 9.6% growth in 2012.
- Capital equipment spending in high-tech sectors will also rise.
- Expenditures for information processing equipment are anticipated to increase by 10.3% in 2011 before decelerating to 5.7% in 2012.
- Industrial equipment expenditures to advance by a robust 19% in 2011 and by 9.2% in 2012.
- Spending on transportation equipment is for healthy 25.7% growth in 2011, and, for 2012, an even better 29.4%.
Exports are anticipated to improve by 8.1% in 2011 and by 8.7% in 2012. Imports are expected to grow by 6.7% in 2011 and by 5.2% in 2012.
MAPI forecasts overall unemployment to improve somewhat, averaging 9% in 2011 and 8.5% 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.
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