MAPI Outlook: Manufacturing Recession 'Intensifies' in 3Q - Modern Distribution Management

Log In

MAPI Outlook: Manufacturing Recession ‘Intensifies’ in 3Q

The U.S. manufacturing recession continued unabated, and in fact intensified in the third quarter, and is now part of a global downturn, according to the Manufacturers Alliance/MAPI Quarterly Industrial Outlook -Third Quarter 2008, a report that analyzes 27 major industries.
 
"There was a sudden and acute acceleration of the decline in the industrial sector in September and October,"said Daniel J. Meckstroth, chief economist for the Manufacturers Alliance/MAPI and author of the analysis. "The vicious circle of financial crisis, decline in wealth, consumer spending cuts, and job loss continues to spiral into a severe recession—certainly the worst since the early 1980s."
 
On an annual basis, MAPI forecasts a decline in the ...
Author
Date

The U.S. manufacturing recession continued unabated, and in fact intensified in the third quarter, and is now part of a global downturn, according to the Manufacturers Alliance/MAPI Quarterly Industrial Outlook -Third Quarter 2008, a report that analyzes 27 major industries.
 
“There was a sudden and acute acceleration of the decline in the industrial sector in September and October,”said Daniel J. Meckstroth, chief economist for the Manufacturers Alliance/MAPI and author of the analysis. “The vicious circle of financial crisis, decline in wealth, consumer spending cuts, and job loss continues to spiral into a severe recession—certainly the worst since the early 1980s.”
 
On an annual basis, MAPI forecasts a decline in the industrial sector this year and next before showing some marginal improvement in 2010. Manufacturing production is expected to fall 1.4 percent in 2008 and decline 4.2 percent in 2009, preceding 0.9 percent growth in 2010.
 
Manufacturing industrial production, measured on a quarter-to-quarter basis, declined at a 7.8 percent annual rate in third quarter 2008 after falling at a 4 percent annual rate in the second quarter.
 
“The financial crisis in the United States has spread to most other regions of the world, creating a global downturn,”Meckstroth said. “A recession among our trading partners has weakened the outlook for exports, which is one of the few remaining pillars providing positive support to the economy, particularly to the manufacturing sector.”
 
Non-high tech manufacturing production declined at a severe 8.2 percent annual rate in third quarter 2008. It is forecast to decline 2.9 percent for the year, fall further by 6.3 percent in 2009, and grow 0.9 percent in 2010.
 
There was a significant downturn in the 2008 third quarter figures for manufacturing. Nine of the 27 industries tracked in the report had inflation-adjusted new orders or production above the level of one year ago, two fewer than reported in the second quarter. Seventeen industries had production below the level of one year ago, and one remained flat.
 
Only one industry, communications equipment, had double-digit, year-over-year growth in the third quarter as it grew by 16 percent.  
 
The largest drop came in housing, with a 32 percent decline in housing starts. Industrial machinery fell by 19 percent, motor vehicle and parts production by 16 percent, basic chemicals by 14 percent, and engines, turbines, and power transmission equipment by 11 percent.
 
Meckstroth writes that no industries are in the accelerating growth (recovery) phase of the business cycle; 10 are in the decelerating growth (expansion) phase; 12 industries appear to be in the accelerating decline (either early recession or mid-recession) phase; and five 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 for 2009 and 2010. The recession in the manufacturing sector is expected to last well into next year, with MAPI forecasting only three of 24 industries to show gains.
 
Aerospace products and parts is predicted to grow by 3 percent in 2009, while communications equipment and public construction should each grow by 1 percent. A turnaround is anticipated in 2010, with 16 of 24 industries expected to expand, led by housing starts at a healthy 50 percent increase. Aerospace products and parts, by 10 percent, is the only other industry predicted to grow by double digits, but any growth in the remaining industries would be a relief from the economic recession that began in December 2007.
 
Seven industries are expected to experience negative change in both 2009 and in 2010 with private, non-residential construction showing the most weakness. The industry is expected to decline by 14 percent in 2009 and by 13 percent in 2010, but is the only one anticipated to have two consecutive years of double-digit retrenchment.
 
For more information, go to www.mapi.net.
 

Share this article

About the Author
Recommended Reading
Leave a Reply

Leave a Comment

Sign Up for the MDM Update Newsletter

The MDM update newsletter is your best source for news and trends in the wholesale distribution industry.

Get the MDM Update Newsletter

Wholesale distribution news and trends delivered right to your inbox.

Sign-up for our free newsletter and get:

  • Up-to-date news in a quick-to-read format
  • Free access to webcasts, podcasts and live events
  • Exclusive whitepapers, research and reports
  • And more!

2

articles left

Want more Premium content from MDM?

Subscribe today and get:

  • New issues twice each month
  • Unlimited access to mdm.com, including 10+ years of archived data
  • Current trends analysis, market data and economic updates
  • Discounts on select store products and events

Subscribe to continue reading

MDM Premium Subscribers get:

  • Unlimited access to MDM.com
  • 1 year digital subscription, with new issues twice a month
  • Trends analysis, market data and quarterly economic updates
  • Deals on select store products and events

1

article
left

You have one free article remaining

Subscribe to MDM Premium to get unlimited access. Your subscription includes:

  • Two new issues a month
  • Access to 10+ years of archived data on mdm.com
  • Quarterly economic updates, trends analysis and market data
  • Store and event discounts

To continue reading, you must be an MDM Premium subscriber.

Join other distribution executives who use MDM Premium to optimize their business. Our insights and analysis help you enter the right new markets, turbocharge your sales and marketing efforts, identify business partners that help you scale, and stay ahead of your competitors.

Register for full access

By providing your email, you agree to receive announcements from us and our partners for our newsletter, events, surveys, and partner resources per MDM Terms & Conditions. You can withdraw consent at any time.

Learn More about Custom Reports

Request a Market Prospector Demo

  • This field is for validation purposes and should be left unchanged.