Manufacturing expansion seen into 2007


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.

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