After a slow first half of 2013, expectations are for the U.S. economy to gradually return to moderate growth in the second half and through 2014, according to the latest Manufacturers Alliance for Productivity and Innovation Quarterly Economic Forecast.
The MAPI forecast predicts that inflation-adjusted gross domestic product will expand 1.6 percent in 2013 and 2.8 percent in 2014, the former down from 1.8 percent and the latter showing no change from MAPI’s May report.
Manufacturing production is expected to fare somewhat better than the overall economy, with anticipated 2.2 percent growth in 2013 and 3.2 percent growth in 2014. The 2013 forecast is a decrease from 3.1 percent, and the 2014 estimate is down from the 3.6 percent predicted in the May forecast.
The report also takes an initial look at 2015, when GDP is expected to rise 3.4 percent and manufacturing production should accelerate at a 4.1 percent clip.
“The outlooks for both the U.S. economy and the global economy are falling into place,” said MAPI Chief Economist Daniel J. Meckstroth, Ph.D. “First half GDP growth in the U.S. was slow because of a number of factors – an increase in the payroll tax, the early effects of sequestration and states’ austerity – taking a substantial amount out of the growth rate. But the payroll tax effect is diminishing and the sequester effect was not as disruptive as forecast; the government seems to be working around it. Additionally, Europe appears to be coming out of recession.”
Meckstroth said consumer spending is holding up reasonably well and business investment is growing at a moderate rate.
“Housing, despite being a lesser share of the economy, is nonetheless booming, and we’re convinced housing starts will be an economic driver,” he added. “This will have a positive domino effect on the supply chain and products that have been struggling, such as wood and glass and plastics products.”
Production in non-high-tech industries is expected to increase 2.1 percent in 2013 and 3.1 percent in 2014. High-tech manufacturing production, which accounts for less than 5 percent of all manufacturing, is anticipated to grow 5.2 percent in 2013 and 7.6 percent in 2014.
The forecast for inflation-adjusted investment in equipment is for growth of 4.2 percent in 2013 and 9.3 percent in 2014. Capital equipment spending in high-tech sectors will also rise. Inflation-adjusted expenditures for information processing equipment are anticipated to increase 5.9 percent in 2013 and 13.3 percent in 2014.
MAPI expects industrial equipment expenditures to advance 2.6 percent in 2013 and 9.8 percent in 2014. The outlook for spending on transportation equipment is for growth of 0.3 percent in 2013 and 5.9 percent in 2014. Spending on nonresidential structures will decline 1.3 percent in 2013 before improving 6.1 percent in 2014.
Inflation-adjusted exports are anticipated to increase 2.1 percent in 2013 and 4.7 percent in 2014. Imports are expected to grow 2.2 percent in 2013 and 6.8 percent in 2014. MAPI forecasts overall unemployment to average 7.6 percent in 2013, 7.1 percent in 2014 and 6.5 percent in 2015.
Slower production gains and strong productivity advances will affect prospects for manufacturing employment growth. Manufacturing is seeing a deceleration in hiring, and the sector is expected to add only 83,000 jobs in 2013, well below the May forecast of 137,000 jobs. The outlook is for an increase of 207,000 jobs in 2014, a significant decrease from the 352,000 previously forecast. The sector is expected to add 250,000 jobs in 2015.
The refiners’ acquisition price per barrel of imported crude oil is expected to average $96.80 in 2013 and $89.00 in 2014.
