Originally created 01/27/99

Computer manufacturing and services to thrive in 1999



WASHINGTON -- Continued stellar growth in practically anything to do with computers should help offset a slowdown in industries hurt by the world economic slump and make the current expansion the longest in U.S. history, the government predicted Tuesday.

In addition to computers, other fast-growing businesses include telephone and broadcasting equipment manufacturing, space commerce, management consulting and public relations, accounting and the mutual funds industry, the Commerce Department said in its annual "U.S. Industry and Trade Outlook."

"The big winners are clearly the information sectors, which continue to plow on regardless of what's happening around the world," said Jonathan C. Menes, the department's director of trade and economic analysis.

But, many industries -- from mining and construction machinery to leather goods to petroleum -- will continue to suffer from either slack world demand or competition from imports produced in countries with devalued currencies.

Other businesses projected to suffer shrinking shipments in 1999 include apparel, newspapers and search and navigation equipment.

The 800-page report, produced for the department by The McGraw-Hill Companies, forecasts trends in 137 manufacturing industries and 36 service and other non-manufacturing businesses. Growth should continue in more than 80 percent of them -- 144. Declines are expected in 27 areas and no change is expected for two.

If realized, the sector-by-sector forecasts add up to another year of expansion for the U.S. economy, albeit at a slower pace than 1998's nearly 4 percent growth rate, said economist David Wyss of Standard & Poor's DRI, a McGraw-Hill division.

Wyss said the recovery from the 1990-91 recession would undoubtedly continue through its eighth anniversary in March and, by next year, should surpass the record expansion of 1961-69.

"No economic expansion has made it to its ninth birthday, but I think this one will," he said.

The report offered these highlights:

INFORMATION TECHNOLOGY: Projected manufacturing growth includes computer and peripherals, 8.7 percent; circuit boards, 14 percent; radio and television equipment, 10 percent; semiconductors, 10.2 percent, and telecommunications equipment, 6.9 percent. Related services expected to grow strongly include information retrieval, data processing and computer consulting.

ELECTRONIC COMMERCE: 52,000 Americans log on to the Internet for the first time, every day. Companies across the economy are exploring sales and marketing on the Internet of products including books, compact discs, newspaper articles, plane tickets, concert tickets, flowers, gardening tools, computers and even traditional durable goods such as cars and refrigerators. One early victim of the sea change: encyclopedia publishers. Encyclopedia Britannica's sales have fallen by more than 50 percent since 1990, after Microsoft began giving away it's CD-ROM encyclopedia, Encarta, to personal computer buyers.

MOTOR VEHICLES: After a healthy 3.6 percent growth last year, shipments should increase about 1 percent this year. Imports claim just 15 percent of the U.S. market, down from 26 percent in 1986, reflecting the increased popularity of U.S.-made sport utility vehicles, vans and light trucks and the establishment of American factories by foreign companies.

HOUSING AND CONSTRUCTION: The construction industry, employing 7.1 million Americans, should increase 1 percent this year after 3 percent growth in 1998.

HEALTH CARE: Health care expenditures should grow 5.6 percent to $1.2 trillion in 1999, compared with 5 percent growth in 1998. Growth in spending on drugs should remain brisk, 7.9 percent in 1999 compared with 10 percent in 1998.

ENERGY: Petroleum imports should increase 17 percent this year, increasing the U.S. dependence on foreign oil. Low coal prices, new technology and increasing competition should push electricity prices down by more than 1.5 percent a year through 2005.