ITR Economics recently revised its forecast for GDP. This mild revision to our GDP outlook was an upgrade, but it is important to keep in mind that GDP pertains to the non-industrial side of the economy. Meanwhile, on the industrial side of the economy (manufacturing, mining, and electric and gas industries), many sectors are either already in or potentially facing a recession. Manufacturing is a significant component of the US economy, and it is facing a bumpy road in 2024. As many industrial markets continue to decline, how long will the recession in manufacturing last?
As it stands now, most US manufacturing markets we track are currently in Phase C, Slowing Growth, with many heading toward a recession later this year. Early on in 2024, the following four sectors are already in Phase D, Recession:
|
Manufacturing Sectors in Phase D, Recession |
Current 12/12 |
|
US Metalworking Machinery New Orders |
-2.9 |
|
US Mining Production (excluding oil & gas) |
-1.8 |
|
US Civilian Aircraft Equipment Production |
-0.1 |
|
US Food Production |
-2.1 |
While manufacturing is on the back side of the business cycle, that does not mean a recession is expected for every manufacturing sector in 2024. In fact, we recently lifted our outlooks for two manufacturing sectors: North America Light Vehicle Production and US Oil and Gas Extraction Production.
The main change made to our North America Light Vehicle Production forecast is that we no longer expect decline for the 12-month moving total this year, but rather relative flatness. This is due in part to resilience in middle-to-upper-income consumers.
We are also no longer expecting a mild decline for US Oil and Gas Extraction Production in 2024, but rather a slowing in the rate of rise from now through mid-2025. This change is due to global demand exceeding supply.
Even with these two upgraded forecasts, most manufacturing sectors will still experience declining trends in 2024. It will be important to avoid dwelling on this bad news and instead keep an eye on the many opportunities just beyond the horizon. For many in the manufacturing space, 2025 is shaping up to be a great year of economic growth, with most markets expected to thrive in Phase B, Accelerating Growth, next year.
How will you prepare your business for the opportunities 2025 will bring? Now is the perfect time to work on your strategy for capitalizing on the economic growth expected in 2025, and ITR Economics can help you with the planning and execution.
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