NEW YORK (CNN/Money) - The U.S. manufacturing sector's recovery is the slowest on record since 1919, according to a report from the National Association of Manufacturers, although the group expects growth to accelerate by the end of 2003.

NAM, an industry trade association, predicted in its 2003 Annual Labor Day Report that the unemployment rate would stabilize at about 6 percent by the end of 2003 and decline to about 5.5 percent in 2004.

"Manufacturing job recoveries are most likely in fabricated metals, machinery, transportation equipment and computers and electronics, which together have accounted for half of the manufacturing job losses," Jerry Jasinowski, NAM's president, said in a statement.

Jasinowski said the economy has lost more than 2.7 million jobs over the past three years and that no more than half of those jobs would return without policy changes.

Threatening the recovery are an overvalued dollar, China's currency controls, and higher manufacturer costs for health care, pensions, regulations, asbestos litigation and energy, according to the NAM report.

"Over the last decade, the prices of manufactured products declined by 4 percent while other business prices rose 18 percent," Jasinowski's said. "This toxic brew is lowering profit margins and reducing cash flow, reducing the funds available for capital investment and jobs."