Industrial production may finally be settling into a steadier rhythm, after a sluggish first half of the year.
In its quarterly economic forecast, the Manufacturers Alliance for Productivity and Innovation predicts that production will increase 2.2% in 2013 and 3.2% in 2014.
While a bit lower than earlier estimates, which anticipated 3.1% growth for 2013 and 3.6% growth for 2014, the figures are indicative of a period of moderate growth, MAPI says.
The same is true of the GDP, although to a lesser extent, MAPI says.
The GDP (adjusted for inflation) is anticipated to increase 1.6% in 2013 and 2.8% in 2014, down from May estimates of 1.8% and 2.8%, respectively.
However, expectations for 2015 show even more hints of a recovery, as MAPI predicts a 4.1% growth in industrial production and a 3.4% improvement in GDP.
“The outlooks for both the U.S. economy and the global economy are falling into place,” says MAPI Chief Economist Daniel J. Meckstroth, Ph.D.
Deceleration in Hiring
“First half GDP growth in the U.S. was slow because of a number of factors—an increase in the payroll tax, the early effects of sequestration, and states’ austerity—taking a substantial amount out of the growth rate.
“But the payroll tax effect is diminishing and the sequester effect was not as disruptive as forecast; the government seems to be working around it.”
Production in non-high-tech industries, which accounts for 95% of total industrial production, is slated for 2.1% growth in 2013 and 3.1% growth in 2014.
“Housing, despite being a lesser share of the economy, is nonetheless booming, and we’re convinced housing starts will be an economic driver,” Meckstroth says “This will have a positive domino effect on the supply chain and products that have been struggling, such as wood and glass and plastics products.”
Particularly strong will be high-tech manufacturing production, which is anticipated to grow 5.2% in 2013 and 7.6% in 2014.
Despite the moderate growth, there is a deceleration in the rate of hiring. The sector is on course to add 83,000 jobs in 2013, 61% lower than the May forecast of 137,000 jobs. In 2014, the sector is expected to add 207,000 jobs, down from the 352,000 previously predicted, and in 2015 250,000 jobs.