ISM forecast: Spending, revenues both expected to keep climbing

Manufacturing sector to keep building on three-year winning streak, report finds.

05/11/2012


Institute of Supply Management logo. Courtesy: ISMManufacturing's strong rebound from the depths of the 2008 recession is expected to continue throughout the rest of 2012, according to the semiannual Institute for Supply Management’s Economic Forecast. Expectations for the remainder of 2012 continue to be positive in both the manufacturing and non-manufacturing sectors.

These projections are part of the forecast issued by the Business Survey Committee of the ISM. The forecast was presented today by Bradley J. Holcomb, CPSM, CPSD chair of the Manufacturing Business Survey Committee and by Anthony S. Nieves, C.P.M., CFPM, chairs of the ISM Non-Manufacturing Business Survey Committee.

Two-thirds of the ISM Manufacturing Business Survey Committee respondents a 9.5% increase in revenues for the rest of 2012, while 15% expect a double-digit decline and 19% forecast no change. The aggregate 4.5% increase, while 1 percentage point lower than December’s forecast, is still line with ISM’s monthly manufacturing report, which has shown growth in the manufacturing sector for almost three straight years.

“With 16 out of 18 industries within the manufacturing sector predicting growth in 2012 over 2011, manufacturing continues to demonstrate its strength and resilience in the midst of global economic uncertainty and volatility. Capacity utilization is at historically typical levels and manufacturers are continuing to invest in their businesses. The positive forecast for revenue growth and modest price increases will drive a continuation of the recovery in the manufacturing sector,” said Holcomb.

Purchasing and supply managers report that their companies are currently operating at 81.6% of normal capacity, representing an increase from the 79.2% reported in December 2011, and a decrease from the 83.2% reported in April 2011.

Production capacity in manufacturing is expected to increase 5.2% in 2012. This increase is slightly less than the 5.6% increase predicted in December 2011 for 2012, but greater than the 4.6% increase reported in December for 2011.

Survey respondents expect a 6.2% increase in capital expenditures in 2012. This is considerably greater than the December 2011 forecast when members predicted an increase of only 1.9% for 2012. Currently, 42% of respondents predict increased capital expenditures in 2012, with an average increase of 23.4%, while the 13% who said their capital spending would decrease expect an average decrease of 25.8%, and 45% say they will spend the same in 2012 as they did in 2011.

- Edited by Chris Vavra, Plant Engineering, www.plantengineering.com 



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