The Manufacturers Alliance for Productivity and Innovation (MAPI) Quarterly Economic Forecast predicts that inflation-adjusted gross domestic product (GDP) will expand by 2.2% in 2012 and by 2.4% in 2013, a solid increase from 1.7% growth in 2011.
"The forecast is a bit more optimistic and the probability of a double-dip recession has diminished," said Daniel J. Meckstroth, Ph.D., MAPI chief economist. "There is pent-up demand for consumer durable goods, especially motor vehicles. In addition, business investment is improving, and not just for repair and replacement of equipment -- there is also investment in expanding capacity. Global infrastructure building is an economic driver, in particular creating a demand in developing countries for U.S. construction, aerospace, and mining and drilling equipment."
Manufacturing production will outpace the overall economy and is expected to show growth of 4% in 2012 and 3.6% in 2013. The 2012 figure is up from 3.4% and the 2013 estimate is down from 3.8% from the November forecast.
Manufacturing is expected to see a net increase in hiring, with the sector forecast to add 210,000 jobs in 2012 and 220,000 jobs in 2013. These figures compare favorably to the November forecast of 170,000 jobs in 2012 and 140,000 jobs in 2013.
There remain some cautionary flags, however. "The major risks will come from developments in the Eurozone and the severity of its recession, and from concerns regarding oil prices, especially with Iran," Meckstroth said. Iran is threatening to disrupt oil tanker traffic in the Strait of Hormuz."
Production in non-high-tech industries is expected to increase by 3.3% in 2012 and by 3.1% in 2013. High-tech manufacturing production, which accounts for approximately 10% of all manufacturing, is anticipated to improve at a higher rate, with anticipated growth of 4.3% in 2012 and 9.3% in 2013.
The forecast for inflation-adjusted investment in equipment and software is for growth of 8.2% in both 2012 and 2013. Capital equipment spending in high-tech sectors will also rise. Inflation-adjusted expenditures for information processing equipment are anticipated to increase by 8% in 2012 and by 8.7% in 2013.
MAPI expects industrial equipment expenditures to advance by 14.3% in 2012 and by 6% in 2013. The outlook for spending on transportation equipment is for growth of 11.7% in 2012 and 13.3% in 2013. Spending on non-residential structures will improve by 5% in 2012 before decelerating to 3.1% in 2013.
Inflation-adjusted exports are anticipated to improve by 4.2% in 2012 and by 6.7% in 2013. Imports are expected to grow by 4.1% in 2012 and by 5.2% in 2013.
MAPI forecasts overall unemployment to average 8.2% in 2012 and 8% in 2013.