U.S. industry should log a ninth consecutive year of growth in 1991, but just barely, says the government's 32nd annual forecast of winners and losers in American business.
The Commerce Department predicted that 110 of 184 manufacturing industries it surveyed would enjoy rising sales this year, and the rest will suffer no growth or a drop in sales.The new year holds promise for high-technology and medical companies, but a broad array of businesses tied to automobile and housing production face dim prospects, it said.
Overall, the median growth rate for manufacturing sales is expected to be 0.89 percent, down from 0.95 percent this year.
The median rate was far healthier in 1988, 2.1 percent; and 1987, 3 percent. The median is the point where half the industries had bigger sales increases and half smaller.
"The outlook is generally one of continuing but slow growth for most sectors," said Commerce Undersecretary J. Michael Farren.
However, the department's forecasts are based on the assumption the economy will avoid a recession. Private economists, however, believe the economy was in recession by the fourth quarter of this year and will continue to shrink through at least the first three months of 1991.
The Commerce Department assumed growth in the gross national product next year would be toward the lower end of a 1 percent to 3 percent range, while private analysts look for minimal growth of around 0.3 percent.
The 560-page report, "U.S. Industrial Outlook," was prepared by 130 analysts using information current through August and September. It goes on sale to the public in January.
In manufacturing, most of the 10 fastest-growing industries are connected with either health care or high technology.
Leather tanning and finishing topped the list, with 9.4 percent growth. But that was an anomaly in an industry that has undergone considerable shrinkage in recent years. Much of the predicted growth was based on the assumption that domestic leather production would increase because of retaliatory duties imposed on leather imports from Argentina.
Leather tanning was followed by semiconductors, the basic building block of computer chips, with a 8.9 percent increase in sales projected; and surgical instruments, up 8.6 percent.
Others in the top 10 were surgical supplies, medicines, diagnostic substances, poultry slaughtering and processing, biological products, aircraft and dental equipment.
On the bottom of the scale was creamery butter, with a projected sales decline of 14.6 percent. The report attributed the drop to consumers' worry about cholesterol and weight gain.
Other shrinking industries were mobile homes, frozen baked goods except bread, boat building, motors and generators, household cooking equipment, hardwood and flooring mills, electric housewares and fans, fabricated metal, and sawmill and planing mills.
The report also evaluated 166 service businesses, the fastest-growing sector of the economy. Electronic information services, computer software and other computer services topped the list. Slower expansion was projected for movie theaters, home entertainment and legal services.
In general, the report said, industries linked to export sales will prevent the U.S. trade deficit from dropping below $100 billion this year, as the Bush administration had predicted earlier. The shortfall was $109.4 billion in 1989.
Farren said the deficit probably will total $104 billion to $105 billion this year, and about the same in 1991.
Meanwhile, retail sales in the United States were projected to rise only 1 or 2 percent after inflation.
"Such products as furniture, appliances and household audio and video equipment are expected to decline," Farren said.
Two key sectors of the economy, construction and motor vehicles, were forecast to have another bad year in 1991, with their weakness spilling over into a variety of related industries.
The survey said high vacancy rates will depress office-building construction by 15 percent, while hotel construction will fall 20 percent. Residential housing construction was forecast to decline 6 percent, from 1.22 million units to 1.15 million.
Car sales probably will fall from 9.5 million this year to 9.3 million in 1991, but truck sales likely will rise about 1 percent to 4.7 million, the report said.