19 September 2013 19:19 [Source: ICIS news]
WASHINGTON (ICIS)--A key manufacturing group on Thursday lowered its outlook for US production and the overall national economy for this year but said that both measures should improve in 2014 as the eurozone emerges from recession.
In its quarterly outlook for US industry and the general economy, the Manufacturers Alliance for Productivity and Innovation (MAPI) said that the nation’s manufacturing output declined by 0.8% in the second quarter, saying that the modest downturn was to be expected.
The Q2 dip in manufacturing, said MAPI, was “a correction for the exceptionally strong pace of manufacturing production [a 5.2% annual rate] in the first quarter”.
The 80-year-old business group said that it expects full-year 2013 manufacturing production will show a 2.2% increase. But that forecast is down from the 3.1% manufacturing growth rate that MAPI predicted for this year in its June outlook.
US manufacturing should perform better in 2014, the analysis said, growing at a rate of 3.2%, but that is a reduction from MAPI's June forecast of 3.6% for 2014.
The alliance, which represents some 500 US major manufacturers including chemicals makers, also lowered its outlook for the nation’s overall economy for this year.
MAPI said it now expects US GDP growth this year will do little better than 1.6%. In June, it had predicted 2013 GDP expansion of 1.8%.
Lowered expectations for US economic performance played a key role in Wednesday’s decision by the Federal Reserve Board to maintain its longstanding monetary stimulus programme.
The US central bank said it was not prepared to ease back on its $85bn (€63bn) in monthly bond buying until the nation’s economy showed more positive growth.
MAPI chief economist Daniel Meckstroth said that he still expects US GDP expansion in 2014 to reach 2.8%, the same as his June forecast.
What economists call normal trend growth for the US economy would mean annual GDP expansion of 3-3.5%.
Meckstroth noted that US consumer spending has remained “remarkably stable” and household spending levels should accelerate in 2014.
“In addition, businesses are well positioned for making new investments in structures and equipment,” he said.
“What is needed is more confidence about the future,” Meckstroth said, adding: “With the eurozone coming out of recession, export activity should pick up and provide a boost to business sentiment.”
However, the IMF recently lowered its expectations for the European economy.
($1 = €0.74)
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