The US domestic manufacturing sector is experiencing a stronger recovery that the economy in general, according to a quarterly report from the Manufacturers Alliance/ Machinery and Allied Products Institute (MAPI).
"A recovery is clearly under way," said Daniel J. Meckstroth, Ph.D., Chief Economist for the Manufacturers Alliance/MAPI and author of the analysis. "Monthly data for manufacturing production indicate that the recession, which started in January 2008, ended in June 2009. The worst of the inventory destocking is ending; inventories do not have to be built to increase production as output growth can result from less liquidation. The inventory swing has had a positive effect on production and was evident in the fourth quarter (2009)."
Manufacturing industrial production grew at a +6 percent annual rate in the fourth quarter of 2009 after an +8 percent growth in the third quarter.
Production in non-high-tech manufacturing rose at a +5 percent annual rate in the fourth quarter, while high-tech industrial production increased at an +8 percent annual rate.
The fourth quarter of 2009 reflected an upward trend for the various components of the manufacturing economy; twelve of the 27 industries tracked in the report had inflation-adjusted new orders or production above the level of one year ago, such as steel production, which grew by +49 percent. The largest drop came in construction machinery production which declined -27 percent while mining, oil field and gas field machinery experienced a -26 percent decline.
Meckstroth reports that 12 industries are in the accelerating growth (recovery) phase of the business cycle; no industry is in the decelerating growth (expansion) phase; two industries, private nonresidential construction and mining, oil field and gas field machinery, appear to be in the accelerating decline (either early recession or mid-recession) phase; and 13 are in the decelerating decline (late recession or very mild recession) phase of the cycle.
The report also offers economic forecasts for 24 of the 27 industries. The manufacturing sector should show improvement in 2010, with MAPI forecasting 17 of 24 industries to show gains, led by steel production with expected +35 percent growth and housing starts with +34 percent growth. The recovery should continue in 2011 with growth likely in 22 of 24 industries, including nine industries which are predicted to grow at double-digit rates, led by housing starts at +70 percent and engines, turbines and power transmission equipment at +28 percent.