Manufacturing sector about 75% recovered, MAPI predicts full recovery by Q4 2014

Despite growing faster than the overall economy since the recession ended, U.S. manufacturing is still only about 75 percent recovered. And their is a wide variation in the performance of industries within the sector, according to the Manufacturers Alliance for Productivity and Innovation (MAPI).

Manufacturing industrial production has increased faster than inflation-adjusted gross domestic product (increasing 18 percent while GDP expanded 9 percent), but manufacturing is still in the recovery phase of its cycle. Manufacturing production declined 20 percent in the recession, and production needs to increase another 5 percent from its Q2 2013 reading in order to return to  Q4 2007 levels. MAPI forecasts that the sector will complete its recovery in Q4 2014.

The U.S. economy, in contrast, declined 4 percent in the recession but recovered all of its lost production by Q2 2011. Overall economic activity continued growing, and by Q2 2013, GDP was more than 4 percent higher than it was pre-recession, thus putting the general economy in the expansion phase of the cycle.

Relative to pre-recession levels, some industries remain severely depressed but others have fully recovered. Electronics, machinery, transportation, and food industries are setting production records.

Within each major industry, the pace of expansion varies considerably by sub-industry. For example, semiconductor production is up 108 percent but instruments are only 9 percent higher.

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Businesses in recovery are profitable, have low debt, and are taking advantage of exceptionally low interest rates to buy business machinery and equipment. There is pent-up demand for transportation vehicles to move people and freight; railroad rolling stock had the fastest expansion within the transportation industry, increasing 26 percent.

The important automotive and light truck industry is up 15 percent and motor vehicle parts production is up 8 percent. The weakest expansion in the transportation industry is that of ship and boat building, up only 1 percent.

Click here to read MAPI’s complete report.

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