Copyright © 2005 Global Insight, Inc. The Many Faces of the US Manufacturing Sector Frantz Price Managing Director, Analytic Forecasting Division Washington, DC June 8, 2005
Copyright © 2005 Global Insight, Inc.2 Presentation Outline Manufacturing activity in the US has rebounded from its longest period of weakness in years. But, what’s ahead? Production Employment Prices Best and worst industry performers
Copyright © 2005 Global Insight, Inc.3 Manufacturing Activity has Bounced Back
Copyright © 2005 Global Insight, Inc.4 …Driven by Investment-related Products
Copyright © 2005 Global Insight, Inc.5 However, Manufacturing Employment has Plunged
Copyright © 2005 Global Insight, Inc.6 …While Productivity has Surged
Copyright © 2005 Global Insight, Inc.7 Investment-Related Products Carry the Lion’s Share of Manufacturing Employment
Copyright © 2005 Global Insight, Inc.8 Materials Prices have Soared, but Pass-through Impact is Generally Moderate
Copyright © 2005 Global Insight, Inc.9 Industries with Fastest/Slowest Output in 2005 – 2006 Fastest Production, Average Annual Growth Computers/Semiconductors 17% Medium/Heavy Trucks 17% Communication Equipment 14% Navigational/Measuring Equip. 8% Medical Equipment & Supply 8% Slowest Production, Average Annual Growth Apparel -8% Textiles -5% Leather -4% Tobacco -3% Wood Products -2%
Copyright © 2005 Global Insight, Inc.10 Which Industries will Add/Cut Jobs in 2005 – 06? Add Employment, Average Annual Growth Nonmetallic Mineral Products 2.5% Machinery 2.4% Fabricated Metal Products 1.8% Miscellaneous Manufacturing 1.7% Food Manufacturing 0.4% Cut Employment, Average Annual Growth Apparel -8.4% Textiles -6.7% Tobacco -1.5% Wood Products -1.2% Furniture -0.4%
Copyright © 2005 Global Insight, Inc.11 Manufacturing Sector Outlook — Bottom Line Production growth slows compared with 2004 Investment remains primary engine of growth Overall manufacturing employment stays stagnant Materials prices peak — finished goods price inflation remains moderate Cost containment is still a key management focus Capacity expansion is limited Productivity gains decelerate but stay strong