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Manufacturing Growth of .9% Forecast for ’91 : Economy: The industrial sector’s performance will continue to lag that of the service sector, the government predicts. Exports are expected to be strong, however.

<i> From Reuters</i>

Industry will continue to grow slowly in 1991 as export activity helps to counteract economic weakness at home, the Commerce Department said Sunday.

Overall, the manufacturing sector will grow 0.9% next year, compared to about 1% this year, the department said in its annual Industrial Outlook, which covers 350 U.S. industries.

The manufacturing sector has been slumping for some time, and Michael Farren, undersecretary for international trade, said service industries will continue to outperform the manufacturing sector next year.

In the latest sign of manufacturing weakness, the Commerce Department said orders for big-ticket durable goods plunged a record-tying 10.5% in November. Such weakness is seen as evidence that the economy has entered a recession that is expected to last at least through the first quarter.

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Nevertheless, the Commerce Department survey shows plenty of bright spots in the manufacturing sector.

High-technology industries will continue to do well, particularly computers and semiconductors, the report said.

Among other fast-growing industries, the report listed surgical and medical material, medicines, poultry processing, aircraft, dental equipment and supplies.

Those expected to lose ground include mobile homes, boat building and repair, creamery butter and frozen bakery products, motors and generators, sawmills and electric housewares.

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“Exports will provide an important source of vitality for many industries, partially counteracting weaknesses in other elements of the U.S. economy,” Farren said.

Other projected growth areas include aircraft, engines and parts, and machine tools.

Of machine tools, Farren said: “This is an indication that businesses will continue to invest in new equipment needed to raise efficiency and productivity in today’s increasingly competitive environment.”

More than 60% of the industries surveyed should grow, and they represent about 75% of all manufacturers, Farren said.

But, “on the negative side, two major segments of the economy--construction and motor vehicles--are again expected to decline,” he said.

Those weaknesses would affect the economy broadly. They have a slowing influence on steel, building materials, household durables, wood products and other industries.

Farren predicted that the 1990 trade deficit will be $105 billion--and 1991’s shortfall about the same--due to higher oil prices triggered by the Persian Gulf crisis.

The 1989 deficit was $109 billion.

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Farren said the department estimated overall 1991 growth at 1% to 3%, with the mostly likely outcome 1.3% to 1.4%.

The Paris-based Organization of Economic Cooperation and Development recently projected U.S. growth for 1991 at 0.9%.


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