ISM Predicts Economic Growth Will Continue Through 2011

Manufacturing revenues expected to grow 7.5%; Non-Manufacturing growth pegged at 2.1 percent for the rest of the year.


Manufacturing Growth Continues in 2011
Revenue to Increase 7.5%
Capital Investment to Increase 17.9%
Capacity Utilization at 83.2%

Non-Manufacturing Growth Also Continues in 2011
Revenue to Increase 2.1%
Capital Investment to Increase 1.4%
Capacity Utilization at 83.7%

Economic growth is expected to continue in the United States throughout the remainder of 2011, say the nation's purchasing and supply executives in their spring 2011 Semiannual Economic Forecast. Expectations for the remainder of 2011 have improved in both the manufacturing and non-manufacturing sectors.

These projections are part of the forecast issued by the Business Survey Committee of the Institute for Supply Management (ISM). The forecast was presented today by Norbert J. Ore, CPSM, C.P.M., chair of the ISM Manufacturing Business Survey Committee; and by Anthony S. Nieves, C.P.M., CFPM, chair of the ISM Non-Manufacturing Business Survey Committee.

Manufacturing Summary

Sixty-eight percent of respondents predict revenues will be 13.2 percent greater, 12 percent expect a 13.2 percent decline, and 20 percent foresee no change. This yields significant expectations for growth in 2011, as manufacturers' net revenues are expected to increase 7.5 percent. This represents an improvement in expectations from December 2010 when the panel of supply management executives predicted a 5.6 percent increase in 2011 revenues compared to 2010. With operating capacity improving to 83.2 percent, an expected capital expenditure increase of 17.9 percent, and prices paid expected to increase 7.4 percent for the full year of 2011, manufacturers will be challenged to grow revenues and contain costs through the remainder of the year. "Much of manufacturing has emerged from the economic downturn and is experiencing significant growth. Capacity utilization is back to typical levels and manufacturers are significantly investing in their businesses. The positive forecast for revenue growth and improved employment will drive the continuation of the recovery in the sector," said Ore.

The 17 industries reporting expectations of growth in revenue during the year — listed in order — are: Plastics & Rubber Products; Fabricated Metal Products; Primary Metals; Apparel, Leather & Allied Products; Machinery; Computer & Electronic Products; Transportation Equipment; Food, Beverage & Tobacco Products; Nonmetallic Mineral Products; Printing & Related Support Activities; Wood Products; Chemical Products; Miscellaneous Manufacturing; Textile Mills; Electrical Equipment, Appliances & Components; Furniture & Related Products; and Paper Products.

Non-Manufacturing Summary

Fifty percent of non-manufacturing purchasing and supply executives expect their 2011 revenues to be greater by 9.3 percent than in 2010. Overall, respondents currently expect a 2.1 percent net increase in overall revenues, which is lower than the 3.4 percent increase that was forecast in December 2010. "Indications are that non-manufacturing will continue on the path of slow and sustainable growth for the balance of 2011. Price increases and slow employment growth are prominent areas of concern in the non-manufacturing sector," Nieves said.

The 13 non-manufacturing industries expecting increases in revenue in 2011 — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Retail Trade; Wholesale Trade; Arts, Entertainment & Recreation; Mining; Real Estate, Rental & Leasing; Information; Other Services; Finance & Insurance; Accommodation & Food Services; Management of Companies & Support Services; Transportation & Warehousing; and Construction.

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