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Manufacturing Growth Continues

July 1, 2004
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ARLINGTON, VA-The long delayed recovery in manufacturing should maintain a robust growth trend throughout 2004, according to the Manufacturers Alliance/MAPI Quarterly Industrial Outlook, a report that analyzes 27 major industries.

First quarter 2004 figures show that 18 of the 27 industries tracked in the report had inflation-adjusted new orders or production above the level of one year ago. While this is a slight retrenchment from 21 industries that showed positive year-over-year growth in the last quarter, in general industries that are growing are doing so at a faster rate while industries that are declining are falling at a slower pace. This number also surpasses the 14 industries that showed growth in third quarter 2003.

Top industry performers, recording double-digit growth, are construction machinery, semiconductors, electronic computer equipment, housing starts and household appliances.

Daniel J. Meckstroth, Ph.D., Manufacturers Alliance/MAPI chief economist and author of the analysis, says that 16 industries are in the accelerating growth (recovery) phase of the business cycle, four industries are in the decelerating growth (expansion) phase, one industrial sector appears to be in the accelerating decline (early recession) phase and six industries are in the decelerating decline (late recession or very mild recession) phase of the cycle.

"The report shows that consumer goods industries continue to have solid growth," Meckstroth says. "Just as important, capital equipment spending has rebounded across a broad range of equipment. Equipment investment is an indication that firms are profitable and confident about future business growth."

Double-digit growth is expected in construction machinery (22%), computers (18%) and industrial machinery (12%). Ten other industries are forecast to show moderately strong growth, including iron and steel products production (7%), appliance production (6%), and motor vehicle and parts production (6%).

Only three industries are forecast to have negative change in 2004-aerospace products and parts production, nonresidential structures, and state and local construction spending, each retrenching 1%.

"We forecast that total manufacturing industrial production will increase 5.7% in 2004," Meckstroth says. "Over the next several years, manufacturing will grow faster than the overall economy."

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