Rough Ride in 2008 Precedes Anticipated Rebound in 2009

March 31, 2008
Manufacturers Alliance/MAPI predicts production is expected to increase 0.5% in 2008 before rebounding to 3.4% growth in 2009.

The Manufacturers Alliance/MAPI Quarterly Industrial Outlook predicts that the turbulent times in the U.S. manufacturing sector during 2008 should give way to a rebound in 2009.

Housing starts were down 26% in the fourth quarter of 2007 and are expected to plummet another 33% in 2008, bottoming out in the second quarter. However, the longer term outlook looks much brighter, says MAPI, with a 32% percent increase in the rate of growth in housing expected for 2009.

According to MAPI's previously released quarterly economic forecast, inflation adjusted exports are expected to expand by 8.1% in 2008 and by 9.9% in 2009, partially offsetting some of the negative effects of the housing crisis.

On an annual basis, MAPI forecasts only slight growth in the industrial sector this year. Manufacturing production is expected to increase 0.5% in 2008 before rebounding to 3.4% growth in 2009.

"Any recession is bad news for manufacturing; however, the structure of the current downturn is concentrated in finance, real estate, and construction and not on manufacturing intensive demand such as business equipment and exports," said Daniel J. Meckstroth, Ph.D., chief economist for the Manufacturers Alliance/MAPI. "Furthermore, the reduction in consumer spending may well hurt foreign imports more than domestically produced items."

Some industries enjoyed strong, double-digit year-over-year growth in the fourth quarter, led by mining and oil and gas field machinery at 31%; communications equipment, and aerospace products and parts each grew at 15%; steel at 13%; electronic computer equipment, and electrical equipment each at 12%.

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