Manufacturing industrial production fell at a 1.0% annual rate in the first quarter of 2015, faster than the 0.7% pace of decline in the overall economy, according to the new U.S. Industrial Outlook published by the MAPI Foundation.
Coupled with other economic and production factors, MAPI lowered its manufacturing production forecast from 3.7% growth this year to 2.5%.
“The slow rebound in March and April following the weather-related downturn in the winter is symptomatic of less growth momentum this year,” MAPI chief economist Daniel J. Meckstroth said. Record cold and snowfall upset construction, transportation, trade and commercial activity for the second straight winter, though manufacturing activity hasn’t bounced back as much in the spring like it did last year. “With a return to normal winter weather next year, manufacturing production should get a boost, posting 4.0% growth in 2016, before decelerating to 3.1% growth in 2017.”
Meckstroth highlighted four factors that had been driving growth, but have changed and are now lowering manufacturing growth potential for this year.
“First, a sudden, rapid decline in oil and natural gas prices caused investment in energy, drilling, exploration and oil country supply chain to rapidly decline,” Meckstroth said. “Second, the rise in the international value of the dollar hurt our trade competitiveness. Third, a large inventory buildup this winter drove the sales ratio to unwanted highs. And finally, consumers remain cautious and risk-averse.”
The new MAPI report includes detailed forecasts for 27 different industries, 20 of which had inflation-adjusted new orders or production at or above the level of the previous year. Fourteen of those 27 industries are in decelerating growth (expansion), eight are in accelerating growth (recovery), three are in decelerating decline (late recession or mild recession) and two are in accelerating decline (early recession or mid-recession) (see chart above).
INDUSTRY FORECASTS
Housing starts: 10% increase in 2015, 19% increase in 2016, 12% in 2017
Motor vehicles and parts production: 7% increase in 2015, 6% increase in 2016, 3% increase in 2017
Household appliance production: 2% increase in 2015, 5% increase in 2016, 4% increase in 2017
Pharmaceutical and medicine production: 2% increase in 2015, 5% increase in 2016, 4% increase in 2017
Iron and steel products production: 9% decline in 2015, 4% increase in 2016, 5% increase in 2017
Alumina and aluminum production and processing: unchanged in 2015, 3% increase in 2016, 5% increase in 2017
Fabricated metal products production: 3% increase in 2015, 3% increase in 2016, 3% increase in 2017
Basic chemicals production: 2% increase in 2015, 3% increase in 2016, 5% increase in 2017
Paper production: 1% decrease in 2015, 1% increase in 2016, 1% increase in 2017
Construction machinery production: 2% increase in 2015, 3% increase in 2016, 2% increase in 2017
Mining and oil and gas field machinery production: 13% decrease in 2015, 18% decrease in 2016, 12% increase in 2017
Industrial machinery production: 11% increase in 2015, 4% increase in 2016, 3% increase in 2017
Heating, ventilation, air conditioning and commercial refrigeration equipment production: 8% increase in 2015, 3% increase in 2016, 4% increase in 2017
Metalworking machinery production: 2% increase in 2015, 5% increase in 2016, 4% increase in 2017
Engine, turbine and power transmission equipment production: 11% increase in 2015, 3% increase in 2016, 3% increase in 2017
Material handling equipment new orders: Not forecasted; in three months ending in April 2015, inflation-adjusted orders were down 1% from the previous year
Shipments of electronic computer equipment: Not forecasted; in three months ending in April 2015, shipments were down 5% from the previous year
Communications equipment production and business activity: 5% increase in 2015, 6% increase in 2016, 5% increase in 2017
Semiconductors: 3% increase in 2015, 3% increase in 2016, 3% increase in 2017, forecasted by World Semiconductor Trade Statistics
Navigational, measuring, electromedical and control instruments production: 5% increase in 2015, 4% increase in 2016, 3% increase in 2017
Electric lighting equipment production: 4% increase in 2015, 5% increase in 2016, 6% increase in 2017
Electrical equipment production: 5% increase in 2015, 4% increase in 2016, 3% increase in 2017
Medical equipment and supplies production: 3% increase in 2015, 2% increase in 2016, 4% increase in 2017
Aerospace products and parts production: 3% increase in 2015, 8% increase in 2016, 7% increase in 2017
Oil and gas well drilling production: Not forecasted; in three months ending in April 2015, drilling activity declined 35% from the previous year and will decline substantially over the coming years as a result of oil price collapse
Private nonresidential construction put-in-place: 2% increase in 2015, 6% increase in 2016, 8% increase in 2017
Public construction put-in-place: 1% increase in 2015, 2% increase in 2016, 1% increase in 2017
