Stock-Market-Trends

Slowly, the Industrial Sector Will Fully Recover in 2014 Says Industry Group

Aug. 27, 2014
Manufacturing production expected to increase 3.4% in 2014 and 4.0% in 2015.

The outlook for the U.S. economy is for steady growth but there is little expectation for a significant upward trajectory, according to a new report by Manufacturers Alliance for Productivity and Innovation.

The group predicts that gross domestic product will expand 2.2% in 2014 and 3.0% in 2015.

GDP is forecast to grow by 3.3% in 2016.

And manufacturing production is expected to outpace GDP, with anticipated growth of 3.4% in 2014, an increase from 3.2% in the previous forecast, and 4.0% in 2015. Manufacturing production is anticipated to rise by 3.6% in 2016.  

“The economy is somewhat constrained by credit availability and risk aversion,” said MAPI Foundation chief economist Daniel J. Meckstroth. “Consumers are driving growth but can’t go much faster. Business investment is the one area that can accelerate yet firms have been reluctant to spend. There is a lot of uncertainty in the marketplace, and we seem to be inundated by negative news, such as about the EU flattening out, a worsening U.S. trade deficit, and whispers that the Fed is at least thinking about raising rates.”

Production in non-high-tech manufacturing industries is expected to increase 3.2% in 2014, 3.8% in 2015, and 3.2% in 2016. High-tech manufacturing production, which accounts for approximately 5% of all manufacturing, is anticipated to grow 4.7% in 2014, 8.5% in 2015, and 10.4% in 2016.

The forecast for investment in equipment is for growth of 5.7% in 2014, 8.3% in 2015, and 7.2% in 2016. Capital equipment spending in high-tech sectors will also rise. Expenditures for information processing equipment are anticipated to increase 4.0% in 2014, and by double digits in each of the next two years—11.9% in 2015 and 10.2% in 2016.

MAPI expects industrial equipment expenditures to advance 11.0% in 2014, 8.6% in 2015, and 5.7% in 2016. The outlook for spending on transportation equipment is for growth of 7.4% in 2014 before declining to 1.5% in 2014 and 0.6% in 2016. Spending on nonresidential structures is anticipated to improve by 6.4% in 2014, 1.8% in 2015, and 7.2% in 2016. Residential fixed investment is forecast to increase 3.6% this year before climbing to 15.7% growth in 2015 and 14.9% in 2016.

“We anticipate 1.3 million housing starts in 2015 and more than 1.5 million starts in 2016,” Meckstroth said. “U.S. manufacturing production is 95% recovered from its September 2007 prerecession peak and will be fully recovered by the end of this year.”

Exports are anticipated to increase 2.7% in 2014, 5.1% in 2015, and 4.3% in 2016. Imports are expected to grow 3.6% in 2014, 5.7% in 2015, and 6.2% in 2016. MAPI forecasts overallunemployment to average 6.3% in 2014 before dropping to 5.7% in 2015 and 5.4% in 2016.

The outlook is for an increase of 184,000 manufacturing jobs in 2014, an upswing from the anticipated 158,000 jobs in the May forecast, and 315,000 additional jobs in 2015, an increase from 212,000 jobs in the previous report.

Meckstroth envisions 86,000 manufacturing jobs to be added in 2016.

About the Author

Adrienne Selko | Senior Editor - MH&L, IW, & EHS Today

Adrienne Selko has written about many topics over the 17 years she has been with Endeavor Business Media and currently focuses on workforce development strategies. Previously Adrienne was in corporate communications at a medical manufacturing company as well as a large regional bank.

She is the author of Do I Have to Wear Garlic Around My Neck? which made the Cleveland Plain Dealer's best sellers list. She is a senior editor at Material Handling & Logistics, EHS Today, and IndustryWeek. 

Editorial Mission Statement:

Manufacturing is the enviable position of creating products, processes, and policies that solve the world’s problems. When the industry stepped up to manufacture what was necessary to combat the pandemic, it revealed its true nature. My goal is to showcase the sector’s ability to address a broad range of workforce issues including technology, training, diversity & inclusion, with a goal of enticing future generations to join this amazing sector.

Why I Find Manufacturing Interesting: 

On my first day working for a company that made medical equipment such as MRIs, I toured the plant floor. On every wall was a photo of a person, mostly children. I asked my supervisor why this was the case and he said that the work we do at this company has saved these people’s lives. “We never forget how important our work is and everyone’s contribution to that.” From that moment on I was hooked on manufacturing.

I have talked with many people in this field who have transformed their own career development to assist others. For example, companies are hiring those with disabilities, those previously incarcerated, and other talent pools that have been underutilized. I have talked with leaders who have brought out the best in their workforce, as well as employees doing their best work while doing good for the world.