February 19, 2020 – Interact Analysis has updated its MIO Tracker, which quantifies global manufacturing production, enabling it to make confident predictions across all industrial and machinery sectors for the next 5 years. The report shows that the current deceleration in manufacturing output seen in 2019 is expected to continue into early 2020. However, a solid recovery is anticipated by 2021, before the sector enters another natural business downcycle towards the end of 2022. A rise in output for most industrial segments is then forecast beyond 2022.
The short-term impact of this will be a reduction in manufacturing investments for 2020, with companies holding off on capital investments due to global economic and political instability.
Commercial vehicle production was a bright spot, with 2019 growth of 5.4% globally. This rounds off several recent years of strong growth in commercial vehicles, and we expect 2020 to be a slower year for the sector – but this is simply a natural part of the market’s cycle. The drive towards electrification of commercial vehicle fleets is accelerating, with one of the strongest growth sectors for electrification being so-called ‘last-mile’ eCommerce delivery vehicles that take goods from the final depot to customer homes.
While China is doing poorly compared to its previous growth rates, order intakes are beginning to rise and in 2019, China maintained its 6% GDP growth target. In particular, the growth rate of metal production in China has accelerated. Interact Analysis views this as an advanced indication of a recovery of the Chinese manufacturing sector more generally because metal production is the foundation of much mechanical equipment manufacturing; as well as China’s largest output industry. By 2024, electrical and electronic production, and chemical and pharmaceutical production, are expected to overtake metal production in terms of output value.
Due to the signing between China and the US of the first part of the agreement for the US to phase out tariff increases, Interact Analysis predicts an increase of 0.5% in Chinese exports during 2020. This will lead to improved manufacturing investment and market confidence.
