Economic recovery in the U.S. will continue for the rest of 2021, according to the Institute for Supply Management’s Spring 2021 Semiannual Economic Forecast. Expectations for the remainder of 2021 have strengthened somewhat compared with December 2020, as there is hope that the corner has been turned on the COVID-19 pandemic, with both the manufacturing and services sectors signaling expansion.

These projections are part of the forecast, which was issued by the ISM’s business survey committees. Timothy R. Fiore, CPSM, CPM, chair of the ISM manufacturing business survey committee, and Anthony S. Nieves, CPSM, CPM, APP, CFPM, chair of the ISM services business survey committee, presented the forecast.

Manufacturing Summary

Revenue for 2021 is expected to increase, on average, by 7.2%. This is 0.3 percentage points higher than the December 2020 forecast of 6.9% and 8.5 percentage points higher than the 1.3% decrease reported for 2020 compared with 2019.

Fifty-nine percent of respondents said revenues for 2021 will increase, with an average increase of 13.8% expected vs. 2020. Only 8% said revenues will decrease, with an average decrease of 13% expected vs. 2020. Meanwhile, 33% of respondents indicated there will be no change in revenues.

With the operating rate at 88.3%, an expected capital expenditures increase of 8.7%, an expected increase of 8.1% in prices paid for raw materials and an expected employment increase of 2.8% by the end of 2021, manufacturing will continue its comeback from the turmoil of 2020, according to the ISM.

“With all 18 manufacturing sector industries predicting revenue growth in 2021, panelists forecast that recovery will continue the rest of the year. The sectors’ responses were consistent with the industry performance reports in the April 2021 Report on Business,” Fiore said.

As Fiore noted, all 18 manufacturing industries are expecting increases in revenue in 2021, including transportation equipment, machinery and primary metals.

Services Summary

Respondents currently expect a 5.4% net increase in overall revenues, which is 3.8 percentage points higher than the 1.6% increase forecasted in December 2020.

Forty-eight percent of respondents said revenues for 2021 will increase, with an average increase of 15% expected vs. 2020. Meanwhile, 11% said their revenues will decrease, with an average decrease of 16.6% expected vs 2020. According to the forecast, 41% of respondents expect no change in revenue.

“Services will continue to recover over the rest of 2021,” Nieves said. “Services companies are currently operating at 89.4% of normal capacity. Supply managers have indicated that prices are projected to increase 4.9% over the year, reflecting increasing inflation. Employment is projected to increase 2.4%. Sixteen of 18 industries are forecasting increased revenues compared with the 12 industries that predicted increases in December 2020.”

Construction, mining and wholesale trade are among the 16 services industries that expect revenue increases in 2021.