Economic improvement in the United States will continue in 2024, say the nation’s purchasing and supply management executives in the December 2023 Semiannual Economic Forecast. Revenues are expected to increase in 15 of 18 manufacturing industries and 16 of 18 services-sector industries. Capital expenditures are expected to increase by 11.9% in the manufacturing sector (after a 14.9%  increase in 2023) and increase by 2.9% in the services sector (after a 4.2%  increase in 2023). In 2024, employment is expected to grow by 2% in manufacturing and 0.8%in services. After projected growth in manufacturing and a contraction in services in the first half (H1) of the year, growth in the second half (H2) is projected to accelerate in manufacturing and strongly re-emerge in the services sector.

These projections are part of the forecast issued by the Business Survey Committees of Institute for Supply Management (ISM). The forecast was released today by Timothy R. Fiore, CPSM, C.P.M, chair of the ISM Manufacturing Business Survey Committee, and by Anthony S. Nieves, CPSM, C.P.M., A.P.P, CFPM, chair of the ISM Services Business Survey Committee.

Manufacturing Summary

Expectations for 2024 are positive, as 58% of survey respondents expect revenues to be greater in 2024 than in 2023. The panel of purchasing and supply executives expects a 5.6%  net increase in overall revenues for 2024, compared to a 0.9%  increase reported for 2023. Fifteen of the 18 manufacturing industries expect revenue improvement in 2024, listed in order of largest to smallest projected increase: Apparel, Leather & Allied Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; Paper Products; Furniture & Related Products; Primary Metals; Miscellaneous Manufacturing; Transportation Equipment; Chemical Products; Textile Mills; Machinery; Fabricated Metal Products; Plastics & Rubber Products; Nonmetallic Mineral Products; and Petroleum & Coal Products.

“Manufacturing’s purchasing and supply executives expect to see overall growth in 2024. They are optimistic about overall business prospects for the first half of 2024 and more excited about faster growth in the second half. According to the ISM Report On Business, manufacturing grew for 28 consecutive months from June 2020 through September 2022, was unchanged in October, but dipped into contraction in November 2022, with the index remaining in contraction until now. Respondents expect raw materials pricing pressure to ease in 2024 and see H1/24 profit margins improving over H2/23. Wages and employment will continue to grow. Manufacturers also predict growth in both exports and imports in 2024,” says Fiore.

In the manufacturing sector, respondents report the companies operating at 83% of normal capacity, up one percentage point from the 82% reported in May 2023. Purchasing and supply executives predict that capital expenditures will increase year over year by 11.9% in 2024, compared to the 14.9%  increase reported for 2023 compared to 2022. Manufacturers expect employment in the sector to grow by 2% in 2024 relative to December 2023 levels, while labor and benefit costs are expected to increase an average of 5.2%. Respondents also expect the U.S. dollar to strengthen against the currencies of seven major trading partners in 2024.

The panel predicts that prices paid for raw materials will increase 3.2% during the first five months of the year, with an overall increase of 3.3% for 2024. This compares to a reported 4.1%increase in raw materials prices in 2023.

Services Summary

Forty-three percent of services supply management executives expect their 2024 revenues to be higher than in 2023. They expect a 6.9% net increase in overall revenues for 2024, compared to a 4.2% increase reported for 2023. The 16 industries expecting revenue increases in 2024 — listed in order of largest to smallest projected increase — are: Retail Trade; Professional, Scientific & Technical Services; Construction; Transportation & Warehousing; Management of Companies & Support Services; Wholesale Trade; Finance & Insurance; Public Administration; Mining; Accommodation & Food Services; Utilities; Health Care & Social Assistance; Arts, Entertainment & Recreation; Information; Other Services; and Educational Services.

“Services supply executives report operating at 86.5% of normal capacity, less than the 91% reported in May 2023. They are guarded about the first half of 2024, but expect robust growth in the second half, with a projected increase in capital reinvestment. They forecast that their capacity to produce products and provide services will rise by 4.1% during 2024, and capital expenditures will increase by 2.9% . Services panel members also predict their overall employment will increase by 0.8% during 2024,” Nieves said.

Respondents in services industries expect the prices they pay for materials and services to increase by 3.4% during 2024. They also forecast that their overall labor and benefit costs will increase 3.3%. Profit margins decreased slightly in the second and third quarters of 2023, but respondents expect growth between now and May 2023.

Read the full report here.