Manufacturing's Slower Grow

Production generally is expected still to be positive in 2006 and 2007.

U.S. manufacturing, running a very respectable growth rate of 3.4% this year, will likely slow to a 2.5% rate next year and to a growth rate of 2.2% in 2007, predicts the latest quarterly forecast from the Manufacturers Alliance/MAPI, an Arlington, Va.-based business and public policy research group. In contrast, manufacturing production grew a torrid 4.8% pace in 2004.

That's not to say there won't be sectors of fast-paced growth ahead, however. For example, the alliance's forecast expects production of machinery destined for mines and oil and gas fields to rise 49% in 2006 and another 22% in 2007 -- both on top of an estimated increase of 18% for 2005. Meanwhile, spending on computers, up an anticipated 35% in dollar terms this year, is forecast to increase 13% in 2006 and 12% in 2007.

Much of the growth in manufacturing production, if it occurs as forecast, will be more modest during the next two years. For example, appliance production is expected to grow 5% in 2006 and 1% in 2007. Basic chemicals production is expected to increase 3% in 2006 and 2% in 2007. Metalworking machinery production is expected to 3% in 2006 and 3% again in 2007. Industrial machinery production is expected to grow by 4% in both 2006 and 2007. Production of pharmaceuticals and medicines is expected to increase 3% in 2006 and 4% in 2007. Production of fabricated metal goods, a category that includes ball bearings, forgings, stampings and fasteners, is expected to increase 2% in 2006 and 2% again in 2007. And paper production is expected to grow 1% in each of the next two years.

For other segments of manufacturing, there is likely to be a mix of decreases and increases. For example, U.S. alumina and aluminum production is expected to decline 1% in 2006 and then increase 2% in 2007. After a 3% increase in production in 2005, motor vehicles and parts are expected to post 2% declines in 2006 and 2007. And following an 8% decrease this year, steel production is expected to be flat in 2006 before increasing 3.1% in 2007.

Other production projections from Manufacturers Alliance are:

2006 2007
Aerospace +6% +4%
Communications equipment +15% +8%
Construction machinery +3% +5%
Electrical equipment +4% +3%
Electric lighting equipment +5% +4%

Engine, turbine & power transmission equipment

+4% +1%
HVAC equipment +6% +5%
Instruments +9% +2%
Medical equipment +6% +4%
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