US manufacturing sector to recover in second half

29 May 2008 20:30  [Source: ICIS news]

WASHINGTON (ICIS news)--The US manufacturing sector is in recession but should begin a recovery in the second half this year and enjoy renewed growth in 2009, the Manufacturers Alliance said on Thursday.

 

In its quarterly outlook for 27 key US manufacturing sectors, the alliance said that “while the current US industrial slowdown shows few signs of abating, a trio of positive factors should highlight at least some production growth in the second half of 2008”.

 

The manufacturing group, whose 450 member firms include global chemical companies and other major producers doing business internationally, said that recent actions by the US central bank in lowering interest rates, the $168bn (€107.5bn) federal stimulus package and continued strong export trade will combine to revive manufacturing in the second half.

 

The alliance said that US manufacturing declined at an annual rate of 0.6% in the fourth quarter last year and was down by 1.4% in the first quarter this year with a further decline of 2.5% expected for the second quarter.

 

However, manufacturing growth is expected to resume in the third and fourth quarters this year and improve to 3.1% expansion in 2009.

 

The broad US manufacturing industry is an important downstream consuming sector for chemicals manufacturers.

 

Much of the anticipated second-half 2008 recovery is likely to come from US exports of manufactured goods, the alliance said, with inflation-adjusted foreign sales expected to grow by 8.3% this year and 9.7% in 2009.

 

In addition, the alliance said that it expects a recovery in 2009 for the long-suffering US housing industry, which has dragged down related manufacturing sectors over the last 18 months.

 

“After suffering through an anticipated 34% decline in 2008, housing starts should see a 25% gain in 2009,” the alliance said.

 

($1 = €0.64)

 

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By: Joe Kamalick
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