The latest forecast from the Manufacturers Alliance for Productivity and Innovation Foundation tempered expectations for the industrial economy this year but is more optimistic about 2016.
The group’s U.S. Industrial Outlook, a quarterly analysis of 27 industrial sectors, anticipated 2.5 percent growth in manufacturing production this year, down from the 3.7 percent increase projected in the March report.
The forecast, however, raised its manufacturing growth predictions for 2016 from 3.6 percent in the March report to 4 percent in the latest analysis.
MAPI officials noted that rough winter weather curbed industrial production in the first quarter of 2015, while the conditions that fostered growth in 2014 changed this year. In particular, falling energy prices, a strong dollar, high inventory levels and muted consumer confidence led to the reduced 2015 forecast.
Daniel Meckstroth, the group’s chief economist, predicted that the market would better absorb those shocks in 2016.
“Presuming we have a return to a ‘normal winter’ this year, manufacturing should get a boost,” Meckstroth said.
The forecast expects engine, turbine and power transmission equipment and industrial machinery to lead the industrial sector in 2015 with 11 percent growth.
Mining and oilfield machinery — which is dealing with sharply lower energy costs — should fall by 13 percent this year. Iron and steel products, which are also affected by oil prices, should decline by 9 percent this year.
In 2016, the group expects housing starts to grow by 19 percent, while mining and oilfield machinery should drop by 18 percent.
Despite the muted forecast for 2015, MAPI experts still anticipate that manufacturing growth will outpace the economy as a whole. The report expects GDP to increase by 2.4 percent this year and 3 percent next year