U.S. manufacturers trimmed forecasts
for economic growth this year and next because of rising oil and
commodity prices, a private survey of financial executives showed.
The Manufacturers Alliance/MAPI’s quarterly economic forecast
put growth in the nation’s gross domestic product at 3.9 percent
in 2004 and 3.4 percent in 2005, down from 4.5 percent and 3.7
percent, respectively, in the group’s August survey. MAPI’s first
polling of growth forecasts for 2006 came in at 3.3 percent.
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“The surge in oil and other commodity prices and rising
penetration from imported goods is taking its toll” said Daniel
J. Meckstroth, chief economist for the Arlington, Va.-based
nonprofit research group, in a statement.
Orders at factories dropped in September for a second month,
and a regional survey conducted by the Federal Reserve found
evidence that the cost of fuel held back consumer and business
purchases that month. Crude oil prices reached $55.67 on Oct. 25,
the highest since futures began trading in 1983, and manufacturers
haven’t been able to pass along the related rising costs.
The MAPI survey showed that U.S. manufacturing activity is
expected to grow faster than the overall economy, at a 5.2 percent
rate this year and 4.1 percent in 2005. The biggest contributor
will be in information technology, with computers and electronic
products expanding by 17 percent in 2004 and 14 percent in 2005.
Spending on equipment and software will rise at a 12 percent
clip this year, and slow to a 9.3 percent pace next year, the
survey found. Inflation-adjusted exports will likely gain by
8.3 percent this year and 8 percent in 2005, while imports are
forecast to increase by 9.5 percent and 5.2 percent, respectively,
a slowing brought on by an expected depreciation in the dollar.
The U.S. economy grew at a 3.7 percent annual rate in the
third quarter, as business fixed investment rose at a 12 percent
pace, the Commerce Department reported last week. Economists
polled by Bloomberg News expect the economy to grow at a 3.6
percent rate next year, down from an expected 4.4 percent in 2004.
Bloomberg News
