Posted May 8, 2018

ISM: Economic growth to continue throughout 2018

Economic growth is expected to continue in the U.S. throughout 2018, say the nation's purchasing and supply executives in their Spring 2018 Semiannual Economic Forecast.

Expectations for the remainder of 2018 continue to be positive in both the manufacturing and non-manufacturing sectors.

Sixty-two percent of respondents from the Institute for Supply Management panel of manufacturing supply management executives predict their revenues, on average, will be 11.6 percent greater in 2018 compared to 2017, 5 percent expect a 11.9 percent decline, and 33 percent foresee no change in revenue. This yields an overall average forecast of 6.6 percent revenue growth among manufacturers for 2018. This current prediction is 1.5 percentage points above the December 2017 forecast of 5.1-percent revenue growth for 2018 and is 2.5 percentage points above the actual revenue growth reported for all of 2017.

“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. However, finding and onboarding qualified labor and being able to pass on raw material price increases will ultimately define manufacturing revenues and profitability,” said Timothy R. Fiore, chair of the ISM Manufacturing Business Survey Committee.

Other survey findings:

Operating rate: Purchasing and supply managers report that their companies are currently operating, on average, at 85.8 percent of normal capacity, the same as in December 2017, as well as an increase from the 82.5 percent reported in May 2017.

Production capacity: Production capacity in manufacturing is expected to increase 4.9 percent in 2018. This increase is more than the 2.7-percent increase predicted in December 2017 and is greater than the 4.3-percent increase reported in December 2017 for all of 2017.

Capital expenditures: Survey respondents expect a 10.1-percent increase in capital expenditures in 2018. This is notably higher than the 2.7-percent increase predicted by the panel in the December 2017 forecast for 2018.

Pricing: In the December 2017 forecast, respondents predicted an increase of 1.3 percent in prices paid during the first four months of 2018; they now report prices actually increased by 4.8 percent.