Manufacturing expansion seen into 2007

By Plant Engineering Staff March 2, 2006

The manufacturing sector should be able to withstand some deceleration and continue its expansion through 2007, according to the Manufacturers Alliance/MAPI Quarterly Industrial Outlook that analyzes 27 major industries.

In a sign of consistent strength in manufacturing, fourth quarter 2005 figures show that 20 of the 27 industries tracked in the report had inflation-adjusted new orders or production above the level of one year ago, the third consecutive quarter that 20 industries have shown improvement, and thus indicating broad-based growth in the industrial sector.

Top industry performers in the fourth quarter, recording year-over-year double-digit growth, were mining and oil and gas field machinery (32%); ventilation, heating, air conditioning, and commercial refrigeration equipment (28%); communications equipment (26%); material handling equipment (23%); oil and gas well drilling (20%); electronic computers (19%); navigational, measuring, electromedical, and control instruments (18%); aerospace product and parts (15%); and electrical equipment (11%).

, writes that 11 industries are in the accelerating growth (recovery) phase of the business cycle; nine are in the decelerating growth (expansion) phase; six appear to be in the accelerating decline (either early recession or mid-recession) phase; and one—iron and steel products—is in the decelerating decline (late recession or very mild recession) phase of the cycle.

“Consumer goods manufacturing grew at a moderate rate in the fourth quarter, material industries declined, but the capital equipment industries were very strong,” said Daniel J. Meckstroth, Manufacturers Alliance/MAPI Chief Economist and author of the analysis. “High- tech manufacturing also grew rapidly in the fourth quarter.”

Three industries are expected to enjoy double-digit growth in both 2006 and 2007:10%/10%).

In addition, two other industries should see double-digit growth in 2006, communications equipment (19%) and navigation, measuring, electromedical, and control instruments (14%).

The Alliance expects some deceleration in manufacturing industrial production, with import penetration bearing some responsibility as many industries continue to compete with foreign producers.