Expect Modest Manufacturing Growth in 2016 - Modern Distribution Management

Expect Modest Manufacturing Growth in 2016

MAPI forecast calls for acceleration next two years before drop-off.
Eric-Smith-84x84

After a flat year, manufacturing should grow 2.6 percent in 2016 and 3 percent in 2017 before tapering off, according the Manufacturers Alliance for Productivity and Innovation Foundation's most recent quarterly Economic and Manufacturing Outlook.

The strong U.S. dollar's impact on GDP growth, slow price recovery in commodities and China's "economic restructuring" have provided strong headwinds, MAPI Chief Economist Daniel J. Meckstroth said during a webcast last week.t

However, the U.S. still had a manufacturing purchasing managers index (PMI) of 54.1 in October, second only to the United Kingdom (55.5) for the month.

"We're still one of the fastest growing manufacturing sectors in the world," Meckstroth said.

MAPI forecasts GDP growth of 2.9 percent in 2016 and 2.7 percent in 2017 before settling at 2.5 percent the next two years.

Meckstroth also highlighted the strength of nonresidential and residential construction, especially the multifamily sector, which is seeing the biggest jump. Housing starts are "coming up from a very low level," Meckstroth said, but they are projected to rise 19 percent in 2016 and 18 percent in 2017; afterward they will continue to grow but at a slower rate.

That forecast bolsters recent news that building materials and construction continues to outperform other sectors. Not only has the sector enjoyed increased construction spending, but distributors in this category also saw the highest revenue growth (2.8 percent) in the third quarter, according to the most recent MDM-Baird Distribution Survey.

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