ISM® Forecasts Economic Growth Will Continue in 2019

• Manufacturing Growth Expected in 2019
• Revenue to Increase 5.7%
• Capital Expenditures to Increase 6%
• Capacity Utilization Currently at 85.2%

(Tempe, Arizona) — Economic growth in the United States will continue in 2019, say the nation’s purchasing and supply management executives in the December 2018 Semiannual Economic Forecast. Expectations are for a continuation of the growth that began in mid-2009, as indicated in the monthly ISM^® Report On Business^®. The manufacturing sector is optimistic about growth in 2019, with revenues expected to increase in 17 manufacturing industries, and the non-manufacturing sector also indicates that 17 of its industries will see higher revenues. Capital expenditures, a major driver in the U.S. economy, are expected to increase by 6 percent in the manufacturing sector and increase by 3.4 percent in the non-manufacturing sector. Manufacturing expects that its employment base will grow by 2.4 percent, while non-manufacturing expects employment growth of 2 percent.

These projections are part of the forecast issued by the Business Survey Committee 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 Non-Manufacturing Business Survey Committee.

Manufacturing Summary

Expectations for 2019 are positive, as 64 percent of survey respondents expect revenues to be greater in 2019 than in 2018. The panel of purchasing and supply executives expects a 5.7 percent net increase in overall revenues for 2019, compared to a 5.1 percent increase predicted for 2018 over 2017 revenues. The 17 manufacturing industries expecting revenue improvement in 2019 over 2018 — listed in order — are: Miscellaneous Manufacturing; Wood Products; Fabricated Metal Products; Printing & Related Support Activities; Primary Metals; Nonmetallic Mineral Products; Apparel, Leather & Allied Products; Transportation Equipment; Furniture & Related Products; Chemical Products; Electrical Equipment, Appliances & Components; Paper Products; Computer & Electronic Products; Textile Mills; Machinery; Food, Beverage & Tobacco Products; and Plastics & Rubber Products.

“Manufacturing purchasing and supply executives expect to see growth in 2019. They are optimistic about their overall business prospects for the first half of 2019, with business continuing to expand through the second half of 2019,” says Fiore. “In 2018, manufacturing experienced 12 straight months of growth from December 2017 through November 2018, resulting in an average PMI^® of 59.2 percent, as compared to 57 percent for the 12 months ending November 2017, as reported in the monthly Manufacturing ISM Report On Business^®. Respondents expect raw materials pricing pressures in 2019 to increase, and expect their profit margins will improve in 2019 over 2018. Manufacturers are also predicting growth in both exports and imports in 2019.”

In the manufacturing sector, respondents report operating at 85.2 percent of their normal capacity, down 0.6 percentage point from the 85.8 percent reported in May 2018. Purchasing and supply executives predict that capital expenditures will increase by 6 percent in 2019 over 2018, compared to the 13.4 percent increase reported for 2018 over 2017. Manufacturers have an expectation that employment in the sector will grow by 2.4 percent in 2019 relative to December 2018 levels, while labor and benefit costs are expected to increase an average of 2.5 percent in 2019. Respondents also expect the U.S. dollar to strengthen against all seven currencies of major trading partners in 2019, as was the case in 2018.

The panel predicts the prices paid for raw materials will increase by 3.5 percent during the first five months of 2019, with an overall increase of 3.3 percent for 2019. This compares to a reported 2 percent increase in raw materials prices for 2018 compared with 2017.

More details, including the special questions asked of the panel here>>