Prospects for Manufacturing Growth Next 16 Months
Posted by Bert Maes on August 27, 2010
We can expect continued growth in manufacturing of a fairly modest 5% or so this year and next year — which is stronger than the overall economy. A couple of things are driving that: One is exports have done well and we expect to continue to see growth in exports. Second, there is some recovery in investment in capital goods. It’s mostly metals inventory rebuilding and replenishing factories for equipment that has gone beyond its useful life. It’s not really adding to productive capacity; it is productivity improvement and simply replacement. Investment in equipment and software is growing, but still far below 2007/2008 levels. The only way to get faster growth in manufacturing is to bump up the overseas export share.