Slow Factory Rebound Seen

A leading manufacturing trade group Wednesday projected that the malaise that has gripped the nation’s factories for more than a year probably will continue well into 2002.

In its annual economic forecast, the National Assn. of Manufacturers predicts the nation’s manufacturing sector, which has been contracting since October 2000, won’t see meaningful recovery until the second half of 2002-nearly two years after the slump began.

NAM says continued reluctance by businesses to invest in new equipment is a major culprit. Non-defense orders for capital goods have declined for six of the last seven months, indicating “that a turnaround in business investment is not likely during the first half of 2002,” according to the report. A strong dollar and weak economies abroad also will continue to curb demand for exports of U.S. manufactured goods.

NAM economist David Huether said U.S. manufacturing tumbled into recession six months sooner than the rest of the economy and probably will be the last sector to claw its way out.

Since September 2000, 1.3 million factory hands have lost their jobs, while sector profits have plummeted.

Huether said NAM is projecting “very anemic” growth in the first two quarters of 2002, with no significant gains expected until the second half of the year. He said factory output may not recover to September 2000 levels until the fall of 2003.

“It’s going to be a slow, gradual recovery,” Huether said.