INTRODUCTION
Industry Outlook 2005
Online Extra: Industry Outlook 2005 Photo Essay
MANUFACTURING
No Gusher, But A Steady Flow
-- Oil prices should soften, but China's needs remain a wild card
-- Producers are adding capacity, which will stabilize price fluctuations
Tax Credits Put Wind In The Sails Of Renewables
Falling clean- energy costs and rising oil prices are turbocharging green, too
More Good Vibes For Heavy Metal
-- Commodities suppliers are profiting from rising prices and strong global demand
-- Heavy-equipment makers, though braked by the cost of metal, are cashing in as well
Aerospace: Preparing For A Descent
-- The industry expects a gradual downturn in defense procurement...
-- ...cushioned (if fuel prices don't skyrocket) by a climb in commercial airline orders
Construction: Still Building
-- With interest rates rising, residential construction will be off its torrid pace of 2004
-- Commercial developers will pick up the slack with new office and retail projects
Transport: Putting The Pedal To The Metal
-- Demand for shipping by air and truck is strong, and prices are rising
-- Companies are struggling with a shortage of railcars and truck drivers
Commentary: Autos: Borrowing From The Future
After years of lavish sales incentives, demand for cars is flat. With higher interest rates ahead, Detroit's best bet is to offer better cars
INFORMATION TECHNOLOGY
Telecom: The Merger Is The Message
-- Net technology is replacing old methods, ushering in an era of souped-up services
-- Distinctions within the industry are blurring as outsiders make inroads
A Welcome Nudge From The Net
Equipment makers are cashing in on demand for Internet gear
Software: Expect The Giants To Stay Sluggish
-- Purchasing decisions are being delayed because of Sarbanes-Oxley and Microsoft
-- Open source is going after niche business and putting pricing pressure on the titans
Tightwad IT Buyers Loosen Up
-- Healthy demand will keep sales of new computers on the upswing
-- But remembering the slump, companies will favor smaller, cheaper systems
Online Extra: Info Tech in Middle Age
The sector is maturing, says IDC's Crawford Del Prete. That means slow but steady growth
No End In Sight To The Honeymoon With Digital
Demand is still climbing for everything from cameras to PDAs to music players
Commentary: The New Driver In Chipland
Now consumers are propelling industry growth as semiconductor smarts become a must in everyday devices and newfangled gizmos
LIFE SCIENCES
More Bitter Pills For Big Pharma
-- Patents are expiring on blockbuster drugs, and there's not much in the pipelines
-- Executives fear that Washington will get tough in the wake of the Vioxx debacle
Biotech Is One Sector With Strong Vital Signs
Commentary: Health Care: More Money, Less Care
Ever higher outlays aren't getting the U.S. a better health-care system, but the pols aren't doing much to redress this miserable equation
SERVICES
Retail: There Goes The Gravy Train
-- Rising interest rates and inflation will probably leave consumers with less to spend
-- Deep discounters such as Wal-Mart will keep the price pressure on rivals
Online Extra: Pushing the RedEnvelope
This specialty e-tailer's CEO talks about what it takes to thrive as a merchant without bricks and mortar
Media: New Generations Steal The Show
-- Most traditional types of media will give up share to a New Media rival
-- Companies are likely to consolidate as they scramble to stay on the cutting edge
Why Big Bucks Are Chasing Targeted Media
Gray Skies Ahead -- But More Will Fly
-- Steep oil prices and overcapacity will keep bogging down airlines
-- Travel is on the rise, perking up profits of hotels and car-rental companies
Professional Services: Cleaning Up By Cleaning Up
-- Uncle Sam's crackdown on fraud has been good for auditors and lawyers
-- Consultants can expect steady work from health-care and government clients
Online Extra: "Huge Progress" in Auditing
Deloitte & Touche CEO Jim Quigley says Sarbanes-Oxley has created "a new plateau" for his industry
Commentary: U.S. Schools: Underperforming
The No Child Left Behind Act isn't doing the trick, and higher college tuition costs are squeezing out lower-income students
FINANCE
Banking: Bracing For The Squeeze
-- Earnings growth from financial services is set to slow as interest rates escalate
-- With companies lean from cost-cutting, mergers could provide the next profit surge
Consumer Debt: The Deeper The Hole, The Better For Business
Collection agencies will benefit as higher rates squeeze debtors
Commentary: Insurance: Now Come The Real Storms
The specter of price wars and increased regulation could send industry executives running for cover
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KEY TO INDUSTRY DATA
Each page within the photo essay links to the appropriate story and
includes a chart
and a table. Here's what the
numbers mean:
SPOTLIGHTS Show industry
performance, by selected
metrics, for 2001-05.
2005 PROSPECTS BW has
given each industry a grade
by comparing its 2005
growth to its growth trend.
2005 GROWTH This forecast
of output growth from
Economy.com gives the
change in the value created
by each industry.
Unlike a measure of revenue,
this "value-added"
approach doesn't count
the same sales twice.
GROWTH TREND Average
annual growth, 1990-2004.
OUTPUT A forecast of the
nominal value each industry
will create this year.
EMPLOYMENT Estimated
number of workers in 2005.
RELATED VIDEO
 2005's Wild Cards
The dollar, oil, inflation, housing, and terrorism are possible disruptions to the new year's outlook, says BW's Kathleen Madigan.
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Copyright 2004, by The McGraw-Hill Companies Inc. All rights reserved.
