ISM Year-End Report: Economic Growth Continues in 2012
Economic growth in the United States will continue in 2012, say the nation's purchasing and supply management executives in their December 2011 Semiannual Economic Forecast.
Summary:
Manufacturing Growth Expected In 2012
Revenue to Increase 5.5%
Capital Expenditures to Increase 1.9%
Capacity Utilization Currently at 79.2%
Non-Manufacturing to Grow Moderately in 2012
Revenue to Increase 3.1%
Capital Expenditures to Increase 0.1%
Capacity Utilization Currently at 85.2%
Economic growth in the United States will continue in 2012, say the nation's purchasing and supply management executives in their December 2011 Semiannual Economic Forecast. Expectations are for a continuation of the economic recovery that began in mid-2009, as indicated in the monthly ISM Report On Business. The forecast projects optimism about the U.S. economy for 2012. The manufacturing sector, overall, is positive about prospects in 2012 with revenues expected to increase in 17 industries, while the non-manufacturing sector appears slightly less positive about the year ahead, with 15 industries expecting higher revenues. Capital expenditures, a major driver in the U.S. economy, however, will increase only modestly in the manufacturing sector, while investment in the non-manufacturing sector will remain essentially flat.
"Manufacturing purchasing and supply executives expect to see continued growth in 2012. They are optimistic about their overall business prospects for the first half of 2012, and are even more optimistic about the second half of 2012."
These projections are part of the forecast issued by the Business Survey Committee of the Institute for Supply Management (ISM). The forecast was released today by Bradley J. Holcomb, CPSM, CPSD, 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
Expectations for 2012 are positive as 69 percent of survey respondents expect revenues to be greater in 2012 than in 2011. The panel of purchasing and supply executives expects a 5.5 percent net increase in overall revenues for 2012, compared to a 7 percent increase reported for 2011 over 2010 revenues. The following 17 manufacturing industries expecting revenue improvement over 2011 — listed in order — are: Computer & Electronic Products; Machinery; Petroleum & Coal Products; Wood Products; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; Apparel, Leather & Allied Products; Furniture & Related Products; Transportation Equipment; Paper Products; Printing & Related Support Activities; Plastics & Rubber Products; Food, Beverage & Tobacco Products; Primary Metals; Fabricated Metal Products; Chemical Products; and Miscellaneous Manufacturing.
"Manufacturing purchasing and supply executives expect to see continued growth in 2012. They are optimistic about their overall business prospects for the first half of 2012, and are even more optimistic about the second half of 2012," said Holcomb. "Manufacturing has demonstrated its resilience throughout this challenging economic recovery period with consistent growth dating back to August of 2009 (as indicated in the monthly ISM Report On Business), and our forecast calls for a continuation of that growth in 2012. Respondents expect raw materials pricing pressures in 2012 to be less than they were in 2011, and expect their margins will improve. Manufacturing is now in its 28th consecutive month of growth as measured by and reported in the monthly Manufacturing ISM Report On Business."
Non-Manufacturing Summary
Fifty-eight percent of non-manufacturing supply management executives expect their 2012 revenues to be greater than in 2011. They currently expect a 3.1 percent net increase in overall revenues for 2012 compared to a 1.5 percent increase reported for 2011 over 2010 revenues. The 15 non-manufacturing industries expecting revenue improvement in 2012 over 2011 — listed in order — are: Professional, Scientific & Technical Services; Mining; Construction; Other Services; Wholesale Trade; Agriculture, Forestry, Fishing & Hunting; Information; Retail Trade; Transportation & Warehousing; Arts, Entertainment & Recreation; Accommodation & Food Services; Real Estate, Rental & Leasing; Finance & Insurance; Utilities; and Public Administration.
PREDICTED CAPITAL EXPENDITURES — 2012 vs. 2011
Manufacturing
Purchasing and supply executives expect capital expenditures to increase 1.9 percent in 2012. The 42 percent of respondents who predict increased capital expenditures in 2012 indicate an average increase of 19.9 percent, while the 16 percent who said their capital spending would be reduced predict an average decrease of 37.6 percent. Forty-two percent said they expect to spend the same in 2012 as in 2011. The 13 industries predicting increases in capital expenditures for 2012 — in order of percentage increase — are: Petroleum & Coal Products; Fabricated Metal Products; Furniture & Related Products; Nonmetallic Mineral Products; Transportation Equipment; Electrical Equipment, Appliances & Components; Printing & Related Support Activities; Primary Metals; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Plastics & Rubber Products; Chemical Products; and Computer & Electronic Products.
Non-Manufacturing
Non-manufacturing purchasing and supply executives are expecting an increase of 0.1 percent in capital expenditures in 2012, significantly less than the increase of 4 percent they are reporting for 2011. The 37 percent of respondents expecting to spend more on capital expenditures predict an average increase of 14.3 percent. An additional 24 percent anticipate a decrease averaging 22.2 percent. Thirty-nine percent expect to spend the same on capital expenditures in 2012 as in 2011.
The seven industries expecting increases in capital expenditures in 2012 — in order of percentage increase — are: Accommodation & Food Services; Mining; Utilities; Professional, Scientific & Technical Services; Construction; Wholesale Trade; and Retail Trade.
EMPLOYMENT — Change in Overall Employment
Manufacturing
ISM's Manufacturing Business Survey Committee members report that manufacturing employment increased 2.4 percent since April 2011, and forecast that employment will increase, on average, 1.3 percent for the full year of 2012.
Non-Manufacturing
ISM's Non-Manufacturing Business Survey Committee members report that non-manufacturing employment has not changed since April 2011. Looking ahead to 2012, they forecast that employment will increase 1.1 percent by the end of 2012. For 2012, 29 percent of respondents expect higher levels of employment, 14 percent anticipate lower levels, and 57 percent expect their employment levels to be unchanged.
The 11 industries anticipating increases in their employment in 2012 — listed in order — are: Professional, Scientific & Technical Services; Mining; Construction; Information; Transportation & Warehousing; Retail Trade; Wholesale Trade; Public Administration; Real Estate, Rental & Leasing; Utilities; and Other Services.
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