The Manufacturing Alliance for Productivity and Innovation (MAPI) released its industrial outlook for next year. It predicts industrial production growth of 3.1 percent in 2014, up from the 2.1 percent rate seen for 2013. Moreover, it expects output to continue to accelerate into 2015, with production growth of 4.1 percent forecasted.
This relatively upbeat assessment of future activity in the sector is buoyed by several factors, according to MAPI. It says that “surprisingly robust employment growth” and rising wealth from higher asset prices will lead to stable growth in consumer spending. In addition, improvements in the global economy should increase overall export sales, which have risen disappointingly slow in 2013. Beyond that, the recently-passed government budget deal should help to alleviate some of the uncertainty in the market, at least to the extent that we will not have another shutdown for the next two years. This means that government uncertainty should provide less of a drag than what we have seen this year.
MAPI expects the housing sector to continue to rebound, with housing starts accelerating in both 2014 and 2015. Just yesterday, we received a positive affirmation of this with very strong numbers for housing starts in November. They also forecast 5 percent growth in private, nonresidential construction next year, with public sector construction spending flat.
Looking at specific sectors, MAPI anticipates healthy gains of five percent or more in the following manufacturing segments: aerospace products and parts; communications equipment; electrical lighting equipment; engine, turbine, and power transmission equipment; household appliances; industrial machinery; iron and steel products; mining and oil and gas field machinery; and ventilation, heating, air conditioning, and commercial refrigeration equipment.
Chad Moutray is the chief economist, National Association of Manufacturers.