The Manufacturers Alliance for Productivity and Innovation (MAPI) released its quarterly industrial outlook today. It forecasts manufacturing production to rise by 3 percent in 2012, with 4 percent growth in 2013. The report analyzes 27 major manufacturing sectors and notes that it anticipates overall production in 2011 to grow by 4 percent, with economic growth picking up in the second half of the year.
Daniel Meckstroth, MAPI’s Chief Economist, said, “The growth is being led by the energy, transportation, and industrial equipment industries.” He goes on to add that domestic auto production, which has picked up dramatically over the past year, will continue to be a major driver of growth in 2012.
In addition, production of computer and high-tech products are forecasted to grow 6 percent and 10 percent in 2012 and 2013, respectively, which is more twice the rate of non-high-tech manufacturing.
Of course, one major headwind could derail many of these predictions: the European sovereign debt crisis. In the summary of the report, the authors write:
A major problem with the slow growth outlook is that this stall speed pace makes the economy susceptible to a double-dip recession, if induced by a major shock. The shock most likely to push the United States into another recession is a systemic bank lending freeze coming from the European sovereign debt crisis. A top domestic risk is that U.S. employers will become more risk averse and cut costs, thus halting job growth. Our modeling finds that the risk of a recession is an uncomfortably high 40 percent probability at this time.
Nonetheless, despite these headwinds, MAPI is anticipating modest growth in U.S. manufacturing production for next year. The sectors experiencing the strongest growth in 2012, in their estimates, were: aerospace products and parts, mining and oil and gas field machinery, motor vehicles and parts and metalworking machinery. They anticipate weakening production in public works construction, household appliances and pharmaceuticals and medicines.
Much of this analysis was also discussed in a recent webinar, “The 2012 Manufacturing Economic Outlook,” organized by the Manufacturing Roundtable of the National Association of Business Economics. The panelists were Daniel Meckstroth and Don Johnson (Chief Economist from Caterpillar), and I served as the moderator. For those who are interested, the slides from these presentations are available on the NABE website.
Chad Moutray is chief economist, National Association of Manufacturers.