For US industry in 1983, a trek toward better sales
Most US industries will enjoy fatter sales in 1983 than they did last year, but the outlook for smokestack America is still far from rosy, private and government forecasters say.
Some 80 percent of the nation's 212 manufacturing industries will ship more goods to customers this year than last, according to a recently released Commerce Department report on the US industrial outlook.
But one third of the industries which post sales gains in the new year will still ship less, on an inflation-adjusted basis, than they did before the recession began in 1981, government economists estimate.
''This recovery in industrial production is the weakest of all the postwar recoveries,'' says Thad Fletcher, an economist at Wharton Econometric Forecasting Associates.
''Recovery is going to be incomplete in 1983, but a start will have been made ,'' notes Robert G. Dederick, undersecretary of commerce for economic affairs. ''The industrial outlook holds good news for a large number of industries.''
Prospects for a relatively vigorous rebound in sales look especially bright in the automobile, home construction, and electronics industries, forecasters say. New Year's tidings are considerably less cheery for makers of machine tools , farm machinery, chemicals, and nonferrous metals.
In general, the industries with the best chance to rebound in 1983 have fortunes tied to spending by consumers or the Defense Department, not to business investment.
''Our forecast assumes the leading factors in the recovery are first, consumer spending; second, housing; and third, accelerated defense spending,'' says Sandra Shaber, senior economist at Chase Econometrics, a forecasting firm.
With consumers worried about unemployment, Chase expects consumer spending this year to rise about 3 percent on an inflation-adjusted basis vs. the 5 to 6 percent gain a typical recovery brings. An anticipated upturn in consumer spending is a key reason the Commerce Department predicts auto shipments will rebound 28.8 percent next year and shipments of toys and games will rise 9 percent.
Defense spending will also spur the industrial recovery, even if President Reagan's plans are trimmed by Congress, economists predict.
''We are looking for defense spending to rise 6.5 to 7 percent in real terms'' in 1983, says Robert Gough, senior vice-president at Data Resources Inc. (DRI), another forecasting firm. ''That translates into a $24 billion increase'' before adjustment for inflation.
Meanwhile, businesses are expected to do relatively little to boost each other's sales. The Commerce Department expects nonresidential fixed investment to be flat in 1983. Wharton sees business investment falling 5.9 percent in 1983 after inflation. With large excess capacity on hand, firms have little incentive to invest in new plants and equipment.
''And the balance sheets of nonfinancial corporations are still in terrible shape. Businesses cannot afford to engage in capital spending at the moment,'' says DRI economist Gough. As a result, government economists expect machine tool shipments to plunge 31.9 percent in 1983, while farm machinery shipments are slated to rise a meager 2.3 percent from current depressed levels.
Since many US trading partners, including Europe and Canada, are still mired in recession, export sales are not expected to significantly boost industrial output. ''There will be some further weakness developing [in trade] in 1983,'' says Commerce official Dederick. The government expects exports to rise 3.3 percent as falling interest rates weaken the dollar. Meanwhile, imports are slated to rise at a 7.0 percent rate as the US economy recovers.
The various elements add up to an economy growing at a relatively slow rate. Reagan administration economists now think the gross national product will rise less than 2 percent in 1983 on an inflation-adjusted basis, vs. the 3.7 percent growth rate assumed in drafting the industrial outlook report. DRI puts the increase at 1.5 percent. Whatever the figure, recovery in industrial production will be spotty.
Here is what 1983 is expected to hold for key industries, according to Commerce Department forecasters:
* Automobile: Helped by lower interest rates, the inflation-adjusted value of motor vehicle shipments will soar by 28.8 percent. Total retail car sales are expected to hit 9.2 million in 1983 vs. 7.9 million in 1982 and 11.3 million in 1978. Of the total market in 1983, imports will claim 2.3 million units, government forecasters say, assuming Japan continues its import limitation program.
* Steel: With automotive and other steel markets recovering, the value of industry shipments will climb 25 percent, and shipments could reach 75 to 80 million tons. That is well below the 100 million tons shipped in 1979, and would require less than 75 percent of the industry's current capacity. During 1982, low utilization prompted numerous plant closings.
* Construction: The value of new construction put in place during 1983 is expected to climb 4 percent over 1982 in inflation-adjusted terms. In the face of lower mortgage interest rates, a 21 percent boost in home building is expected. Most other construction catagories, including office buildings and factories, are expected to show declines.
* Farm machinery: Farmers have put off equipment purchases, so pent-up demand has grown. But low prices for agricultural products and relatively high interest rates are expected to keep this industry from posting any more than a 2.3 percent gain in the value of shipments during 1983.
* Chemicals: A number of factors will keep inflation-adjusted shipments in the chemical industry from rising faster than 2.1 percent next year. Demand for fertilizer has been hit by poor farm profits. And demand for organic chemicals is likely to lag by several months an upturn in purchases of consumer goods. Meanwhile, rising natural gas prices hurt the nation's ability to export certain chemicals.