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U.S. Manufacturing Recession Seen Intensifying as Housing, Auto Weakness Spread
Declines creep into equipment and materials industries, but high-tech a bright spot in Manufacturers Alliance/MAPI Quarterly Industrial Outlook; minimal improvement seen in 2009
Arlington, VA — September 2, 2008 — The U.S. manufacturing recession continued its downward trend in the second quarter, and medium-term prospects show only minimal improvement, according to the Manufacturers Alliance/MAPI's "Quarterly Industrial Outlook — Second Quarter 2008," a report that analyzes 27 major industries.
"Automakers drastically cut production in the second quarter to clear out bloated stocks, and housing-related industries continued to reel from the gloom in residential construction," said Daniel J. Meckstroth, chief economist for the Manufacturers Alliance/MAPI and author of the analysis. "The declines in these major manufacturing industries, directly and indirectly, depress many other industries in the sector."
On an annual basis, MAPI forecasts a decline in the industrial sector this year. Manufacturing production is expected to fall 0.5 percent in 2008 before showing marginal improvement to 1.6 percent growth in 2009.
Manufacturing industrial production, measured on a quarter-to-quarter basis, declined at a 1 percent annual rate in first quarter 2008 and at a 3.9 percent annual rate in second quarter 2008.
High-tech Bright Spot
"High-tech industries such as computers, communications equipment and semiconductors continue to post double-digit unit volume growth and thus helped cushion a more severe downturn that occurred in non-high tech manufacturing," Meckstroth said.
Non-high-tech manufacturing production declined at a severe 5.2 percent annual rate in second quarter 2008 and is forecast to decline 1.8 percent overall in 2008.
There was a significant downturn in the 2008 second quarter figures for manufacturing. Eleven of the 27 industries tracked in the report had inflation-adjusted new orders or production above the level of one year ago, three less than reported in the first quarter. Fourteen industries had production below the level of one year ago, and two remained flat.
"Automakers drastically cut production in the second quarter to clear out bloated stocks, and housing-related industries continued to reel from the gloom in residential construction," said Daniel J. Meckstroth, chief economist for the Manufacturers Alliance/MAPI and author of the analysis. "The declines in these major manufacturing industries, directly and indirectly, depress many other industries in the sector."
On an annual basis, MAPI forecasts a decline in the industrial sector this year. Manufacturing production is expected to fall 0.5 percent in 2008 before showing marginal improvement to 1.6 percent growth in 2009.
Manufacturing industrial production, measured on a quarter-to-quarter basis, declined at a 1 percent annual rate in first quarter 2008 and at a 3.9 percent annual rate in second quarter 2008.
High-tech Bright Spot
"High-tech industries such as computers, communications equipment and semiconductors continue to post double-digit unit volume growth and thus helped cushion a more severe downturn that occurred in non-high tech manufacturing," Meckstroth said.
Non-high-tech manufacturing production declined at a severe 5.2 percent annual rate in second quarter 2008 and is forecast to decline 1.8 percent overall in 2008.
There was a significant downturn in the 2008 second quarter figures for manufacturing. Eleven of the 27 industries tracked in the report had inflation-adjusted new orders or production above the level of one year ago, three less than reported in the first quarter. Fourteen industries had production below the level of one year ago, and two remained flat.
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