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MAPI Forecasts 2015 CAPEX Growth in Equipment Sectors

November 25, 2014, 07:00 AM
Filed Under: Economy

Strong growth in jobs plus replacement demand for equipment from businesses will provide a stable base for overall economic growth, according to a new report.

The MAPI Foundation, the research affiliate of the Manufacturers Alliance for Productivity and Innovation, released its quarterly economic forecast, predicting that inflation-adjusted gross domestic product will expand 2.8% in 2015 and 3.0% in 2016. Both are declines from the August report—of 3.0% and 3.3%, respectively.

Manufacturing production is expected to outpace GDP, with anticipated growth of 3.5% in 2015 (a decrease from 4.0% in the previous forecast) and 3.9% in 2016 (an increase from 3.6% in the August report).

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

“We will have full employment in 18 months and manufacturing is already there,” said 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% in 2015 and 3.7% in 2016. High-tech manufacturing production, which accounts for approximately 5% of all manufacturing, is anticipated to grow 8.2% in 2015 and 10.0% in 2016.

The forecast for inflation-adjusted investment in equipment is for growth of 6.9% in 2015 and 7.3% 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% in 2015 and 12.3% in 2016. The MAPI Foundation expects industrial equipment expenditures to advance 7.6% in 2015 and 3.6% in 2016. Conversely, the outlook for spending on transportation equipment is for decreases of 0.8% in 2015 and 0.4% in 2016.

To read the full MAPI forecast, click here.

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