Manufacturing, the sector of the economy that turns out everything from frozen fruits and vegetables to fabricated structural metal, picked up steam in 1987 and will continue to roll along in 1988, according to the Commerce Department's industrial outlook for the new year.
Buoying the outlook for manufacturing is an expected 2.4 percent growth in the median value of shipments this year, the sixth consecutive year of increases. The share of the manufacturing industries surveyed by the agency that anticipate an increase in shipments -- 82 percent -- is largest in the last decade.
"Overall, 1988 should be another growth year, possibly better than 1987," said Clarence J. Brown, deputy secretary of Commerce, in unveiling the department's industrial outlook for the coming year. For many industries, some of which are now running at capacity, a stronger export market and falling dollar will account for increased shipments.
The 650-page annual outlook is an industry-by-industry overview of more than 350 manufacturing and service industries. Within the Commerce Department, 130 analysts forecast shipments, revenues, trade flows, employment and earnings.
In the manufacturing sector, computer equipment is expected to be the fastest-growing in 1988, with shipments increasing 22 percent, the report said. Eight of the fastest-growing industries are related to electronics, defense or the medical field.
Seven of the industries that are expected to grow most slowly this year are construction-related. Flat glass is expected to be the worst performer.
Over a broader period, computing equipment has posted the largest increase between 1972 and 1988, followed by semiconductor devices. The biggest loser over the period was the industry that makes turbine generator sets for electric utilities.
As in the manufacturing sector, computer-related activities will lead the services industries in 1988. Services continue to be the dominant growth sector of the U.S. economy and have many of the fastest-growing industries in 1988.
Overall, service industries have increased their share of the gross national product in current dollars from 44 percent in 1972 to 50 percent in 1986. Manufacturing, meanwhile, has held constant at about 20 percent of GNP since World War II.
Service industries will continue to be a major source of employment growth, having accounted for 73 percent of full-time employes in 1986. Business services -- data processing, accounting, legal services and personnel supply services -- led in job growth. Health care also was a big contributor.
The optimistic outlook for services in 1988, the report said, is due to the shift in demand from goods to services, an active market for specialized business services and their positive role in international trade, which mitigates the stubborn merchandise trade deficit.
"Services have become a separate and identifiable major input into the business environment," Brown said.
The most growth in the service area is expected to occur in information services such as data processing, computer services and electronic databases, which the agency said will grow between 8 and 20 percent in revenues in 1988.
Videotex, or interactive electronic information services such as telebanking and electronic newspapers, will top the growth chart for services, adding 25 percent more subscribers this year.
Some of the gain in shipments and growth for many industries can be attributed to a more friendly trading environment in which a falling dollar has allowed companies to increase exports.
But the report also pointed out that the drop in the dollar since February 1985 has not spurred a rapid turnaround in the U.S. balance of trade because the decline "varied widely by country, impacted differentially on trade in specific products and was, in fact, of less significance than commonly reported.
"Although there have been some early signs of improvement in both U.S. export and import trade since the dollar hit its peak in 1985, the full effects from recent changes in U.S. price competitiveness are still to be realized and will likely vary considerably across manufacturing commodity groups," the report said.
Trade balances with Japan and major European countries, however, "could be expected to show some improvement in the future," the report noted.
The department predicted that U.S. exports of food, tobacco, lumber, industrial inorganic chemicals, pharmaceuticals, office and computing machines and aircraft should benefit the most from currency and competitive price changes.
Apparel, furniture and iron and steel products are not expected to do as well on the export front compared with other manufactured areas because of stronger competition in their markets.
On the opposite side of the trade equation, imports are likely to grow more slowly or decline for tobacco, chemicals, steel, nonelectrical machinery, instruments and transporation equipment, including motor vehicles and aircraft.
The report noted that only tobacco, pharmaceuticals, office and computing machines and aircraft are likely to get the double benefit of increases in exports and decreases in imports due to stronger price competitiveness at home and in foreign markets.
Any effect that the Oct. 19 plunge of the stock market may have had on the predictions, which were made before the crash, will have to be assessed industry by industry, Brown said.
In broader terms, Robert Ortner, undersecretary of Commerce for economic affairs, said he "wouldn't be overly concerned" about the effects of the market crash on the economy, although the consumer sector is likely to feel some reverberations.
"We're not counting on much growth there to carry the economy in 1988," Ortner said, noting that consumer spending had already slowed before the October shock to the stock market. "We're counting on exports and capital spending."