In the Institute for Supply Management’s semiannual economic forecast, the nation’s purchasing and supply executives said they expect continued economic growth in the U.S. throughout 2018.
Manufacturing Summary
Sixty-two percent of respondents from the panel of manufacturing supply management executives predict their revenues, on average, will be 11.6% greater in 2018 compared to 2017. Meanwhile, 5% expect an 11.9% decline and 33% foresee no change in revenue. This yields an overall average forecast of 6.6% revenue growth among manufacturers for 2018. This current prediction is 1.5% above the December 2017 forecast of 5.1% revenue growth for 2018 and is 2.5% above the actual revenue growth reported for all of 2017.
With operating rate at 85.8%, an expected capital expenditure increase of 10.1%, an increase of 5% for prices paid for raw materials and employment expected to increase by 1.8% 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,” said Timothy R. Fiore, chair of the ISM Manufacturing Business Survey Committee. “However, finding and onboarding qualified labor and being able to pass on raw material price increases will ultimately define manufacturing revenues and profitability.”
The 15 industries reporting expectations of growth in revenue for 2018 included transportation equipment, electrical equipment and machinery.
Non-Manufacturing Summary
Forty-nine percent of non-manufacturing purchasing and supply executives expect their 2018 revenues to be greater by 7.1% as compared to 2018. Respondents currently expect a 3.2% net increase in overall revenue, which is less than the 6% 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,” said Anthony S. Nieves, chair of the ISM Non-Manufacturing Business Survey Committee.
“Supply managers have indicated that prices are projected to increase 2.1% over the year. Employment is projected to grow 1.5%. 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.”
The 16 non-manufacturing industries expecting increases in revenue in 2018 included agriculture, transportation, construction, rental and leasing as well as finance and insurance.
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