While the pace of recovery in the general economy has clearly slowed, the deceleration is less visible in the manufacturing sector, according to the Manufacturers Alliance/MAPI.
"Despite less consumer spending growth in the second quarter, there was nevertheless some employment growth and modest wage increases. Also, the prolonged downturn and sluggish recovery have created pent-up demand for some durable goods, including sales of motor vehicles and appliances," said Daniel J. Meckstroth, Chief Economist for the MAPI. "The inventory swing is greatest in manufacturing; exports are predominantly manufactured and benefitted from the fast global trade bounce back; and business investment in equipment rebounded much faster than consumer spending, thus making the pace of the industrial recovery stronger than that in the general economy.
Manufacturing industrial production, measured on a quarter-to-quarter basis, grew at an 8% annual rate in the three months ending July 2010, after expanding at a 5% annual rate in the three months ending April 2010.
MAPI predicts the superior growth trend for manufacturing will continue, but decelerate, increasing 6% overall in 2010 and advancing 5% in 2011. At this pace it will be late 2012 before manufacturing production exceeds the December 2007 pre-recession level.
Production in non-high-tech manufacturing expanded at an 8% annual rate during the May-July 2010 period. According to the MAPI report, non-high-tech manufacturing production is expected to increase approximately 5% in 2010 and 4% in 2011. High-tech industrial production rose at a 10% annual rate in the May-July 2010 time frame. The group anticipates that it will post strong 15% growth in 2010 and 13% growth in 2011.
Iron and steel production grew by 68% in the three months ending in July 2010 compared to the previous three months, while industrial machinery production improved by 58% in the same window. MAPI forecasts that iron and steel production will grow 56% and industrial machinery will increase 36%.