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Our panelists at last week’s 2011 Economic Forecast webcast outlined a moderately positive outlook for next year. Perhaps the best description is continued slow growth. And while some economists are raising their expectations for 2011 if the current tax-reduction compromise happens, our panelists aren’t quite as bullish, and they offered some great insight into specific customer segments in both the construction and manufacturing sectors.
(If you missed the webcast, you can order the full 2011 Economic Forecast program on DVD, featuring forecasts for construction and manufacturing, plus profitability advice from Al Bates.)
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On the construction side, Ken Simonson, chief economist for The Associated General Contractors of America, sees total construction spending bottoming out in 2010 with some steady and modest gains in 2011. He forecasts total construction spending will increase 3-7 percent in 2011, with residential up 5 percent-10 percent, while non-residential will improve by 0 percent-5 percent. His primary concerns include continued high unemployment and its impact on non-residential construction markets. He spoke of how loans for developers continue to be tight. And state and local tax shortfalls mean that capital projects likely will be postponed.
On the manufacturing side, economist Don Norman of the Manufacturers Alliance/MAPI forecasts overall 2010 GDP ending up at a 2.8-percent increase over last year. He forecasts a 2.5-percent increase for 2011, and a stronger 3.2 rate-of-growth for 2012. Automotive sectors will continue to bounce back in 2012, as consumer industries led manufacturing into the recession and are leading the moderate recovery. Norman sees the brightest spots in investment-related manufacturing production, as cost-cutting, productivity enhancement, and repair and replacement drive capital equipment industries. Some of the hot areas over the next two years include engines & turbines, drilling equipment, aerospace and industrial machinery.
MDM's 2011 Economic Forecast, which also featured Profit Planning Group's Al Bates, is now available on DVD. In it, Norman and Simonson go into more detail on what's coming next for the construction and manufacturing end-markets. Order the 2011 Economic Forecast in the MDM Store. A preview of the forecast is available here.