Economic growth in the U.S. will continue in 2017, according to projections in the forecast issued by the Business Survey Committee of the Institute for Supply Management (ISM). Expectations are for a continuation of the economic recovery that began in mid-2009, as indicated in the monthly ISM Report on Business.

Manufacturing Summary

Expectations for 2017 are positive as 67% of survey respondents expect revenues to be greater in 2017 than in 2016. The panel of purchasing and supply executives expects a 4.6% net increase in overall revenues for 2017, compared to a 0.9% increase reported for 2016 over 2015 revenues.

The 16 manufacturing industries expecting revenue improvement in 2017 over 2016 — listed in order — are: printing and related support activities; textile mills; fabricated metal products; furniture and related products; electrical equipment, appliances and components; computer and electronic products; transportation equipment; miscellaneous manufacturing; petroleum and coal products; chemical products; primary metals; paper products; food, beverage and tobacco products; nonmetallic mineral products; plastics and rubber products and machinery.

In the manufacturing sector, respondents report operating at 81.9% of their normal capacity, up 0.2 percentage point from the 81.7% reported in April 2016. Purchasing and supply executives predict that capital expenditures will increase by a modest 0.2% in 2017 over 2016, compared to the 7.3% increase reported for 2016 over 2015. Manufacturers have an expectation that employment in the sector will grow by 0.6% in 2017 relative to December 2016 levels, while labor and benefit costs are expected to increase an average of 2.5%. Respondents also expect the U.S. dollar to strengthen against all seven currencies of major trading partners in 2017, as was the case in 2016.

The panel predicts the prices paid for raw materials will increase by 0.9% during the first four months of 2017, and will increase an additional 0.4% during the balance of the year, with an overall increase of 1.3% for 2017. This compares to a reported 0.4% decrease in raw materials prices for 2016 compared with 2015.

Non-Manufacturing Summary

Fifty-seven percent of non-manufacturing supply management executives expect 2017 revenues to be greater than in 2016. They currently expect a 4.1% net increase in overall revenues for 2017 compared to a 2.7% increase reported for 2016 over 2015 revenues.

The 14 non-manufacturing industries expecting revenue improvement in 2017 over 2016 — listed in order — are: information; professional, scientific and technical services; construction; arts, entertainment and recreation; agriculture, forestry, fishing and hunting; management of companies and support services; retail trade; wholesale trade; mining; utilities; accommodation and food services; finance and insurance; health care and social assistance and other services.

Respondents in non-manufacturing industries expect the prices they pay for materials and services will increase by 1.8% during 2017. They also forecast their overall labor and benefit costs will increase 2.5% in 2017. Profit margins are reported to have increased in Q2/16 and Q3/16, and respondents expect them to increase between now and April 2017.