U.S. industry, helped by continued strong demand for exports, will enjoy a seventh consecutive year of rising sales in 1989, with high-technology businesses leading the gains, according to government forecasts.
The Commerce Department last week released the 30th edition of its U.S. Industrial Outlook, which each year picks the winners and losers among American businesses based on detailed analyses of market trends in 350 different manufacturing and service industries."Totaling up all the individual forecasts, you can see that we are looking for another positive year for the economy," Deputy Commerce Secretary Donna Tuttle said.
"Services will continue to be strong, and the majority of manufacturing industries will continue to grow, especially those producing capital equipment and exports," she said at a news conference where she previewed the 566-page book.
Tuttle said more than 70 percent of U.S. manufacturing industries were expected to see higher sales in the new year, with the median growth rate, after adjusting for inflation, projected to be 2.3 percent.
Those projections represented a slight drop from the current year, reflecting the belief that the non-farm economy, while not in danger of a recession, will not do quite as well in 1989, Tuttle said.
Among the report's forecasts:
-Some sectors of manufacturing will be held back by a continuing slump in the construction industry, which will depress the demand for steel and other building materials.
-Industries providing services instead of goods, the fastest growing portion of the economy, will continue to do well in 1989, led by firms specializing in computers.
-Aerospace, one of the largest manufacturing industries, will show modest overall growth as rising demand for civilian aircraft is offset by a drop in military orders.
-Car sales will decline by about 1 percent to 10.6 million units, with the share of sales held by manufacturers in Canada and the United States holding steady at about 72 percent.
-The banking industry, despite continued problems with international debts and stiff competition from non-banking financial companies, will show good growth, with assets rising by about 7 percent.
-Airlines will have another strong year, with revenues rising by more than 14 percent. Trucking revenues will rise 7 percent, while revenues earned by railroads will increase 2 percent.
-Health and medical services, one of the fastest growing service industries, will show a sharp 10.7 percent rise in 1989 to an estimated $618 billion.
The report said the service category with the biggest projected percentage increase will be space commercialization, where revenues are expected to rise by 50 percent to $2.7 billion as the commercial launch industry in the United States begins its first year of operation.
Other service standouts will be in the fields of data processing, computer services and electronic data bases, with revenues projected to rise by between 13 percent and 20 percent.
In the manufacturing sector, the star performer is expected to be the metal-cutting segment of the machine tool industry, with shipments projected to rise by 13.9 percent. That reflects the boom in capital investment as American industry rushes to expand production facilities to meet rising export demands.
The No. 2 manufacturing industry will be semiconductors, with a projected 13.4 percent rise in shipments; followed by a 13 percent increase in paper making machinery. Paper plants are now operating at 95 percent of capacity and are trying to expand to meet the high level of demand.
Many of the manufacturing sectors expected to perform the most sluggishly were tied to the construction industry. Sales of chemical preparation were projected to drop by 14.6 percent, the largest overall decrease. Sales of household cooking equipment were forecast to decline by 7.9 percent, reflecting an expected decline in construction of new homes next year.
Demand for steel products are forecast to fall by 6.9 percent in 1989, reflecting a drop in demand for steel girders in construction.
The Industrial Outlook can be purchased for $24 at the government's 21 regional bookstores.