WASHINGTON -- U.S. manufacturing will continue to grow in 1988 because of a weaker dollar that helps exports and business investments in new capital equipment, the Commerce Department predicted Thursday.
The department released its annual economic outlook report, a 650-page book written by 130 analysts, predicting that manufacturing shipments will be up 2.4 percent during the year.
It would be the sixth consecutive year that shipments have grown since the last recession ended in November 1982.
The major impetus to economic growth in 1988 will come from increased exports, which outweigh an anticipated slowdown in consumer consumption, the department said.
'Bilateral trade balances with most major European countries and Japan could be expected to show some improvement in the future,' based on the drop in the dollar's value, which makes U.S. exports cheaper to foreigners, the report said.
The department also said that businesses will be investing in new capital equipment and may choose to build inventories in 1988 more than they have in the past.
Consumer spending, which has been strong in recent years, will decline in 1988 despite a $28.5 billion reduction in personal income taxes under the 1986 tax reform act. One reason is that people will be saving more, the department said.
Because the report was compiled based on information gathered before the October stock market crash, Deputy Commerce Secretary Clarence Brown said economists would have to make their own judgments about the crash's effect on the nation's economy in 1988.
'My personal assessment is that in some industries the decline in the stock markets, and the decline in the interest rates that followed that and the decline in the dollar that followed it will enhance the prospects of the industry for growth,' Brown said.
The department's industry-by-industry analysis suggested high-technology industries will continue to grow faster than traditional manufacturing enterprises.
Eight of the fastest growing industries will be in the electronics, defense or medical fields while seven of the slowest-growing industries will be in the construction field, the report said.
Computer manufacturing will see the strongest growth with a projected 10 percent growth in value of shipments next year. Others in the top 15 include manufacturers of semiconductor devices, copper, metal-cutting machines, metal-forming machines and optical devices and lenses.
The list of slowest-growing industries include flat glass, rubber and plastic footwear, fabricated structural metal, photoengraving and dolls.
Other projections for major industries included in the report were:
-Steel shipments will change little from 1987, rising 1 percent because of modest improvements in demand from capital goods producers.
-Auto producers will see across-the-board growth in car sales following a disappointing 1987, but they will have problems because of over-capicity between 1988 and the mid-1990s.
-The value of new construction put in place in 1988 will stay at about the same near-record levels as 1987 even though housing starts and commercial construction will decline. New homes will be larger and cost more.