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November 25, 2014

MAPI forecasts 2015 CAPEX growth in equipment sectors

U.S.--Strong growth in jobs plus replacement demand for equipment from businesses will provide a stable base for overall economic growth, says the quarterly economic forecast by the MAPI Foundations, the research affiliate of the Manufacturers Alliance for Productivity and Innovation.

The report predicts that inflation-adjusted gross domestic product will expand 2.8 per cent in 2015 and three per cent in 2016. Both are declines from the August report – of three per cent and 3.3 per cent, respectively.

Manufacturing production is expected to outpace GDP, with anticipated growth of 3.5 per cent in 2015 (a decrease from four per cent in the previous forecast) and 3.9 per cent in 2016 (an increase from 3.6 per cent in the August report).

The November 2014 report forecasts a five-year horizon in which GDP is expected to average 2.8 per cent and manufacturing production to average 3.26 per cent growth.

“We will have full employment in 18 months and manufacturing is already there,” says MAPI Foundation Chief Economist Daniel J. Meckstroth. “With the unemployment rate continuing to fall, the pain and suffering from the recession is dissipating. Why are businesses spending? Because consumers are spending. Also, the drop in energy prices is essentially a tax cut for us. Lower prices are a positive development.”

Production in non-high-tech manufacturing is expected to increase 3.8 per cent in 2015 and 3.7 per cent in 2016. High-tech manufacturing production, which accounts for approximately 5 per cent of all manufacturing, is anticipated to grow 8.2 per cent in 2015 and 10.0 per cent in 2016.

The forecast for inflation-adjusted investment in equipment is for growth of 6.9 per cent in 2015 and 7.3 per cent in 2016. Capital equipment spending in high-tech sectors will also rise. Inflation-adjusted expenditures for information processing equipment are anticipated to increase by double digits in each of the next two years – 12.1 per cent in 2015 and 12.3 per cent in 2016. The MAPI Foundation expects industrial equipment expenditures to advance 7.6 per cent in 2015 and 3.6 per cent in 2016. Conversely, the outlook for spending on transportation equipment is for decreases of 0.8 per cent in 2015 and 0.4 per cent in 2016.

To read the full MAPI forecast,   click here.




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