The Manufacturing Alliance for Productivity and Innovation (MAPI) released its industrial outlook for next year. It predicts industrial production growth of 2 percent in 2013, down from 2.3 percent in its most recent quarterly forecast. This is also down from the estimated 4.2 percent growth seen in 2012. MAPI expects for production to pick up in 2014, though, with an annual percentage change of 3.2 percent anticipated.
As we have seen in other forecasts, housing continues to be a bright spot, with MAPI estimating starts of 979,000 by the end of 2013, or a 28 percent increase from 2012. This is a positive development that helps manufacturers involved in building materials and furnishings sectors, but it also helps lift the larger macroeconomy. Behind the scenes, these improvements are lifted by historically low mortgage rates – a benefit of the Federal Reserve’s quantitative easing initiatives.
Transportation is also expected to grow strongly in 2013, with strong demand for aerospace products and motor vehicles. Motor vehicle production increases in 2013 of 5 percent is slower than the 19 percent growth experienced in 2012. But, MAPI expects vehicle sales to total 15.1 million units in 2013 and grow to average 16.5 million units from 2015 to 2017. The sector is clearly moving in the right direction. Likewise, demand for new airplanes will push aerospace production up 16 percent and 17 percent, respectively, in 2013 and 2014.
Outside of those sectors, the sector-by-sector analysis is more mixed. Worries about slowing global sales and the fiscal cliff have hampered activity in the second half of 2012 continue to have an impact. Moreover, consumer spending is only growing modestly, up around 2 percent, which is limiting increased activity in some durable and nondurable goods industries. There is clearly a broad-based deceleration in production in most of the 24 sectors that MAPI analyzes, with 14 of these areas predicted to grow.
Chad Moutray is chief economist, National Association of Manufacturers.