US revises outlook report to reflect increasing momentum of recovery
The improving economy means most key US industries will ring up sales gains in 1983, according to a new Commerce Department report. Of the major industries highlighted in the department's midyear update of its 1983 Industrial Outlook report, 23 of 29 are expected to post higher sales than in 1982.
''The aggregate economy is in a solid advance and the nonfarm business economy is in a rapid advance,'' says Robert G. Dederick, undersecretary of commerce for economic affairs.
Government analysts significantly boosted their 1983 sales forecasts for nine industries: residential construction, furniture, lumber, appliances, cement, semiconductors and petrochemicals.
''This suggests the recovery is following the classic lines of recoveries in postwar years and is being lead by residential construction and automobiles,'' says John E. Cremeans, research director for the department's Bureau of Economic Analysis.
But he adds, ''As in most recoveries, the benefits will be distributed unevenly among industries.''
In updating forecasts first issued in December, the department significantly downgraded the sales outlook for five industries: steel, agricultural chemicals, farm machinery, construction machinery, and oil-field machinery. The forecasts for 15 other industries were not changed significantly, Mr. Cremeans says.
Also substantially unchanged was the department's assumption about how well the economy will rebound in 1983. It is forecasting that economic output will be 5 percent higher in the fourth quarter of 1983 than in the same period of 1982.
The outlook for the residential construction industry has undergone the most pronounced improvement. The value of residential construction put in place in 1983 is expected to total $103 billion in 1983, a jump of 32 percent over 1982 levels and up 13 points from the December forecast.
''We don't think the boom in residential construction will continue at the rate it is going, '' cautions analyst Gerald Moody. ''The rise will level off. It is hard to believe interest rates will fall much in the next couple of months. (So) we are not likely to see a big expansion in housing starts.'' He predicts housing starts in 1983 will total 1.6 million.
The bleakest forecast is for machine-tool manufacturers, whose sales are slated to fall 31 percent below depressed 1982 levels. The industry is suffering from stiff price competition from less developed coutries that want to enter the industry, notes analyst Thomas J. Gallogly. ''After 1983, there will be a strengthening in machine-tool demand,'' he says. ''The question is: Who will be there to answer the demand.''