Decline in Motor Vehicle Market Spreads to Equipment and Materials Industries

Aug. 28, 2008
MAPI sees production declining 0.5% in 2008 but showing 1.6% growth in 2009.

The U.S. manufacturing recession continued its downward trend in the second quarter and medium-term prospects show only minimal improvement, according to the Manufacturers Alliance/MAPI Quarterly Industrial Outlook -- Second Quarter 2008. "Automakers drastically cut production in the second quarter to clear out bloated stocks, and housing-related industries continued to reel from the gloom in residential construction," said Daniel J. Meckstroth, Ph.D., Chief Economist for the Manufacturers Alliance/MAPI. "The declines in these major manufacturing industries, directly and indirectly, depress many other industries in the sector."

On an annual basis, MAPI forecasts a decline in the industrial sector this year. Manufacturing production is expected to fall 0.5% in 2008 before showing marginal improvement to 1.6% growth in 2009.

Manufacturing industrial production, measured on a quarter-to-quarter basis, declined at a 1% annual rate in first quarter 2008 and at a 3.9% annual rate in second quarter 2008.

"High tech industries such as computers, communications equipment, and semiconductors continue to post double-digit unit volume growth and thus helped cushion a more severe downturn that occurred in non-high tech manufacturing," Meckstroth said.

Non-high tech manufacturing production declined at a severe 5.2% annual rate in second quarter 2008 and is forecast to decline 1.8% overall in 2008.

Some industries enjoyed strong double-digit, year-over-year growth in the second quarter, led by communications equipment at 21%; mining and oil and gas field machinery had 15% growth; private non-residential construction enjoyed 13% growth; and aluminum and alumina improved by 11%.

Motor vehicle and parts production fell by 15%. Industrial machinery production dropped by 12%.

Looking forward MAPI forecasts communications equipment growing at 17%, and mining and oil and gas field machinery improving by 13%. Aerospace products and parts will grow 10%, in 2009.

Electric lighting equipment is expected to decline by 10% in 2008 and by 9% in 2009, while appliance production is anticipated to drop by 10% and by 8%, respectively. Construction machinery is forecast to decline by 9% in 2008 and then by 8% in 2009.

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