Economic growth is expected to continue in the U.S. throughout 2018, say the nation’s purchasing and supply executives in their Spring 2018 Semiannual Economic Forecast. Expectations for the remainder of 2018 continue to be positive in both the manufacturing and non-manufacturing sectors.
These projections are part of the forecast issued by the Institute for Supply Management® (ISM®) Business Survey Committees. The forecast was presented today by Timothy R. Fiore CPSM, C.P.M., chair of the ISM Manufacturing Business Survey Committee; and by Anthony S. Nieves, CPSM, SC.P.M., A.P.P., CFPM, chair of the ISM Non-Manufacturing Business Survey Committee.
Manufacturing Summary
Sixty-two percent of respondents from the panel of manufacturing supply management executives predict their revenues, on average, will be 11.6 percent greater in 2018 compared to 2017, 5 percent expect a 11.9 percent decline, and 33 percent foresee no change in revenue. This yields an overall average forecast of 6.6 percent revenue growth among manufacturers for 2018. This current prediction is 1.5 percentage points above the December 2017 forecast of 5.1-percent revenue growth for 2018 and is 2.5 percentage points above the actual revenue growth reported for all of 2017. With operating rate at 85.8 percent, an expected capital expenditure increase of 10.1 percent, an increase of 5 percent for prices paid for raw materials, and employment expected to increase by 1.8 percent by the end of 2018 compared to the end of 2017, manufacturing is positioned to grow revenues while managing costs through the remainder of the year. “With 15 of the 18 manufacturing sector industries predicting revenue growth in 2018, when compared to 2017, U.S. manufacturing continues to move in a positive direction. However, finding and onboarding qualified labor and being able to pass on raw material price increases will ultimately define manufacturing revenues and profitability,” says Fiore.
The 15 industries reporting expectations of growth in revenue for 2018 — listed in order — are: Miscellaneous Manufacturing; Fabricated Metal Products; Transportation Equipment; Plastics & Rubber Products; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Wood Products; Primary Metals; Machinery; Chemical Products; Paper Products; Furniture & Related Products; Food, Beverage & Tobacco Products; and Nonmetallic Mineral Products.
The manufacturing panel was also asked Special Questions related to the impact thus far in 2018 on the following: (1) In the past six months, has your firm had difficulty hiring workers to fill open positions? (2) In the past six months, has your firm raised wages to recruit new hires? (3) In the past six months, has your firm offered additional training for new hires? (4) In the past six months, has your firm increased, decreased or left unchanged its capital spending plans for the next 12 months? And why did you say so? (5) Do you believe that tariffs will raise the price of the goods that you produce and deliver to your customers? (6) If you believe that tariffs will raise the price of your goods to your customers, by how much? (7) Do you believe that tariffs will cause delays and disruptions in your supply chain? Their responses are provided at the end of this report.
Non-Manufacturing Summary
Forty-nine percent of non-manufacturing purchasing and supply executives expect their 2018 revenues to be greater by 7.1 percent as compared to 2018. Respondents currently expect a 3.2 percent net increase in overall revenue, which is less than the 6 percent increase that was forecasted in December 2017. “Non-manufacturing will continue to grow for the balance of 2018. Non-manufacturing companies continue to operate efficiently, which is reflected by the high percentage of capacity utilization. Supply managers have indicated that prices are projected to increase 2.1 percent over the year. Employment is projected to grow 1.5 percent. Sixteen out of 18 industries are forecasting increased revenues, which is fewer than the 17 industries that forecasted increased revenues last year. The non-manufacturing sector will continue economic growth throughout the year,” says Nieves.
The 16 non-manufacturing industries expecting increases in revenue in 2018 — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Mining; Transportation & Warehousing; Information; Management of Companies & Support Services; Construction; Arts, Entertainment & Recreation; Wholesale Trade; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Health Care & Social Assistance; Finance & Insurance; Retail Trade; Utilities; Public Administration; and Accommodation & Food Services.
The non-manufacturing panel was also asked Special Questions related to the impact thus far in 2018 on the following: (1) In the past six months, has your firm had difficulty hiring workers to fill open positions? (2) In the past six months, has your firm raised wages to recruit new hires? (3) In the past six months, has your firm offered additional training for new hires? (4) In the past six months, has your firm increased, decreased or left unchanged its capital spending plans for the next 12 months? And why did you say so? (5) Do you believe that tariffs will raise the price of the goods that you produce and deliver to your customers? (6) If you believe that tariffs will raise the price of your goods to your customers, by how much? (7) Do you believe that tariffs will cause delays and disruptions in your supply chain? Their responses are provided at the end of this report.
OPERATING RATE
Manufacturing: Purchasing and supply managers report that their companies are currently operating, on average, at 85.8 percent of normal capacity, the same as in December 2017, as well as an increase from the 82.5 percent reported in May 2017. The 11 industries reporting operating capacity levels at or above the average capacity of 85.8 percent — listed in order — are: Apparel, Leather & Allied Products; Wood Products; Paper Products; Petroleum & Coal Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Textile Mills; Chemical Products; Transportation Equipment; Computer & Electronic Products; and Furniture & Related Products.
Non-Manufacturing: Non-manufacturing purchasing and supply executives report that their organizations are currently operating at 85.5 percent of normal capacity. This is 6.4 percent less than what was reported in December 2017 and less than the 86.9 percent reported in May 2017. The nine industries operating at capacity levels above the average rate of 85.5 percent — listed in order — are: Real Estate, Rental & Leasing; Mining; Retail Trade; Finance & Insurance; Public Administration; Accommodation & Food Services; Transportation & Warehousing; Health Care & Social Assistance; and Construction.
