Based on the most recent Manufacturers Alliance for Productivity and Innovation Foundation outlook, Christmas came early for the U.S. manufacturing sector. Even better, it is poised for a prosperous New Year.
With strong gains already posted this year, widespread growth lies ahead for manufacturing, with production forecasted to grow 3.5 percent in 2015, 3.9 percent in 2016 and 3.1 percent in 2017, says MAPI Chief Economist Daniel J. Meckstroth.
"Job gains are the core driver of economic growth," he wrote on the alliance's website, and "investment growth drivers include natural gas infrastructure, the housing supply chain, transportation infrastructure, factory automation, medical care expansion, and increasing confidence."
According to MAPI's third quarter economic forecast, manufacturing is almost back to its pre-recession level after increasing at a 3.9 percent annual rate for the period. The number of U.S. manufacturing plants, which declined 19 percent between 1998 and 2013 before flattening last year, now stands at 305,000 facilities. And the United States’ Purchasing Managers Index for October was 55.9, the highest rating in the world.
More good news came this week from MAPI, which reported that manufacturing production posted 0.2 percent gains in both September and October, and should increase at a 1.4 percent annual rate in the fourth quarter and 3.3 percent growth for 2014. That is a percentage point better than the 2.3 percent gain in the overall economy.
"Manufacturing will continue to grow faster than the overall economy because demand has shifted to long-lived goods," Meckstroth wrote. "Spending on durable goods, business equipment, and construction was postponed in the recession and sluggish recovery, but now the items are wearing out and need replacing."
Leading the way for manufacturing is high-tech production (computers and electronic products), which the alliance projects to grow 6.4 percent in 2015, 10.7 percent in 2016 and 11.2 percent in 2017. Low debt burdens and rising consumer wealth should also spur the sector, Meckstroth wrote.