US manufacturing, GDP forecast to slow this year

17 May 2007 23:15  [Source: ICIS news]

WASHINGTON (ICIS news)--US manufacturing growth will slow significantly this year as part of an overall deceleration in the nation’s gross domestic product (GDP) but both will regain some strength in 2008, an industry group said on Thursday.

 

The Manufacturers Alliance said in its quarterly economic forecast that the US manufacturing sector “will experience a more pronounced deceleration this year, trending downward from 4.7% growth in 2006 to 2.1% growth in 2007”.

 

In addition to being significant part of the country’s manufacturing sector, US chemicals production depends on the health of the broader manufacturing industry as a major downstream consumer of chemicals and chemicals-related products and processes.

 

The alliance said, however, that it expects industrial production to rebound next year to reach a growth rate of 3.3% - but still below the level of growth experienced in 2006.

 

For the US economy overall, the alliance said it expects inflation-adjusted GDP growth to slow to a sub-par level of 2.3% this year, compared with last year’s growth rate of 3.3%, before recovering to 3% growth in 2008. A growth rate of around 3% is considered par or average for a healthy economy.

 

“The deceleration in economic growth is primarily a consequence of the continued housing slump, soft business investment, a surprise downshift in exports and inventory adjustment,” said Daniel Meckstroth, chief economist at the alliance.

 

However, Meckstroth added, there are already signs of a rebound in business activity.

 

“The American consumer is resilient, the inventory correction has run its course, and fundamentals remain strong for export growth,” he said. “We expect growth to pick up the pace in the second half of 2007.”

 

The 74-year-old Manufacturers Alliance is a non-profit economic and research organisation whose member firms include chemical producers.

By: Joe Kamalick
+1 713 525 2653

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