MAPI: Manufacturing recovery on track
The U.S. economic outlook continues to show modest improvement, but while the manufacturing recovery is on track, caution flags remain for the overall economy.
The Manufacturers Alliance/MAPI Quarterly Economic Forecast predicts that inflation-adjusted gross domestic product (GDP) will expand by 2.7 percent in 2011 and by 2.9 percent in 2012. The 2011 forecast represents a downgrade over the previously estimated 3.2 percent growth, while the 2012 forecast is down slightly from the 3 percent growth anticipated in the February 2011 quarterly report. By supplying major assumptions for the economy and running simulations through the IHS Global Insight Macroeconomic Model, the Alliance generates unique macroeconomic and industry forecasts.
"The economy is continuing to grow at a moderate pace with consumer durable goods, business equipment, and exports leading the way," said Daniel J. Meckstroth, Ph.D., Manufacturers Alliance/MAPI chief economist. "Rising oil prices and government austerity at all levels, however, give pause to any excessive optimism."
Manufacturing production will outpace the overall economy and is expected to show 6.2 percent growth in 2011 and 4.2 percent growth in 2012. Manufacturing is expected to see a hiring increase with the sector forecast to add 288,000 jobs in 2011 and 374,000 jobs in 2012.
"The manufacturing recovery is solid but it has only regained half of its losses since the depths of the recession in 2007, when it fell 20 percent at its trough," Meckstroth said. "On the positive side there is some employment growth, a need to replace and repair business equipment, and the falling dollar makes the United States competitive in supplying equipment to emerging countries for infrastructure projects.
"On the downside, federal, state and local government spending has shifted into a restraint mode, and high oil and commodity prices pose a risk," he added. "The situation in the Middle East remains fluid and, while fears may have eased of late, there is no timeline to the endgame because of the volatile political climate."
INDUSTRIAL SUPPLY MAGAZINE
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