ISM: Economic improvement to continue through '24
The U.S. economy will continue to softly expand for the rest of 2024, say the nation’s purchasing and supply executives in the Spring 2024 Semiannual Economic Forecast. Expectations for the remainder of 2024 are similar to those expressed in December 2023, despite continued inflation concerns and geopolitical uncertainty.
These projections are part of the forecast issued by the Institute for Supply Management (ISM) Business Survey Committees. The forecast was presented today by Timothy R. Fiore, CPSM, C.P.M., chair of the ISM Manufacturing Business Survey Committee, and Anthony S. Nieves, CPSM, C.P.M., A.P.P., CFPM, chair of the ISM Services Business Survey Committee.
Manufacturing Summary
Revenue for 2024 is expected to increase, on average, by 2.1 percent. This is 3.5 percentage points lower than the December 2023 forecast of 5.6 percent, and 1.2 percentage points higher than the 0.9-percentage point year-over-year increase reported for 2023. Forty-four percent of respondents say that revenues for 2024 will increase, on average, 8.6% compared to 2023.
Fourteen percent say revenues will decrease (12.3 percent, on average), and 42% indicate no change. With an operating rate of 82.8% and projected increases in capital expenditures (1 percent), prices paid for raw materials (1.9 percent) and employment (0.3 percent) by the end of 2024, the manufacturing sector continues its comeback from the turmoil that began in 2020. “With 12 manufacturing industries expecting revenue growth in 2024 and nine industries expecting employment growth in 2024, panelists forecast that recovery will continue the rest of the year, albeit somewhat softer than originally expected. Sentiment in each industry was generally consistent with performance reports in the April 2024
Manufacturing ISM Report On Business, as well as the fall Semiannual Economic Forecast conducted in December,” says Fiore.
Twelve of 18 industries report projected revenue increases for the rest of 2024, listed in order: Apparel, Leather & Allied Products; Food, Beverage & Tobacco Products; Transportation Equipment; Computer & Electronic Products; Chemical Products; Nonmetallic Mineral Products; Primary Metals; Textile Mills; Furniture & Related Products; Fabricated Metal Products; Electrical Equipment, Appliances & Components; and Paper Products.
Services Summary
Respondents expect a 2.9% net increase in overall revenues, which is 4 percentage points lower than the 6.9-percent increase forecast in December 2023. Thirty-six percent of respondents say that revenues for 2024 will increase, on average, 10.3% compared to 2023. Meanwhile, 10% expect their revenues to decrease (7.5 percent, on average), and 54% indicate no change. “The services sector will continue to grow for the rest of 2024. Services companies are currently operating at 88.6% of normal capacity. Supply managers indicate that prices are expected to increase 3.2% over the year, reflecting increasing inflation.
Employment is projected to increase 0.8 percent. Thirteen industries forecast increased revenues, down from the 16 industries that predicted increases in December 2023,” says Nieves.
Thirteen of 18 industries expect revenue increases in 2024, listed in order: Retail Trade; Mining; Transportation & Warehousing; Other Services; Management of Companies & Support Services; Accommodation & Food Services; Professional, Scientific & Technical Services; Construction; Wholesale Trade; Public Administration; Utilities; Information; and Finance & Insurance.
Operating Rate
Manufacturing
Purchasing and supply executives report that their companies are operating, on average, at 82.8% of normal capacity, 0.2 percentage point lower than the figure reported in December 2023. The 10 industries reporting operating capacity levels above the average rate of 82.8% — listed in order — are: Paper Products; Textile Mills; Petroleum & Coal Products; Transportation Equipment; Computer & Electronic Products; Wood Products; Machinery; Primary Metals; Food, Beverage & Tobacco Products; and Fabricated Metal Products.
Services
Organizations are operating, on average, at 88.6% of normal capacity, according to Business Survey Committee respondents. This is 2.1 percentage points higher compared to December 2023. The eight industries operating at capacity levels above the average rate of 88.6% — listed in order — are: Educational Services; Other Services; Finance & Insurance; Retail Trade; Utilities; Agriculture, Forestry, Fishing & Hunting; Construction; and Public Administration.
Production Capacity
Manufacturing
Production capacity is expected to increase 2.4% in 2024; in December, panelists reported an increase of 0.7 percentage point for 2023 and projected an increase of 7.8% this year. Thirty percent of respondents expect capacity increases of, on average, 12.6 percent; 7% expect decreases of, on average, 19.7%; and 62% expect no change. The 12 industries expecting production capacity increases for 2024 — listed in order — are: Nonmetallic Mineral Products; Furniture & Related Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Fabricated Metal Products; Primary Metals; Chemical Products; Plastics & Rubber Products; Petroleum & Coal Products; Transportation Equipment; Electrical Equipment, Appliances & Components; and Paper Products.
Services
The capacity to produce products or provide services in the services sector is expected to increase 2.6% in 2024. This compares to an increase of 3.9% reported for 2023 and a December projection of a 4.1-percent increase for this year. Sixteen percent of services respondents expect their capacity for 2024 to increase, on average, 17.6%, and 2% foresee capacity decreasing, on average, 11.2 percent. Eighty-two% expect no change in capacity. The 14 industries expecting production capacity increases for 2024 — listed in order — are: Retail Trade; Mining; Professional, Scientific & Technical Services; Construction; Transportation & Warehousing; Arts, Entertainment & Recreation; Accommodation & Food Services; Wholesale Trade; Information; Management of Companies & Support Services; Public Administration; Health Care & Social Assistance; Utilities; and Finance & Insurance.
Predicted Capital Expenditures — 2024 Vs. 2023
Manufacturing
Survey respondents expect a 1-percent increase in capital expenditures in 2024, much lower than the 11.9% increase forecast by the panel in December. Twenty-four percent of respondents predict increased (on average, 19.8%) capital expenditures in 2024, 14% said their capital spending would decrease (on average, 26.2 percent), and 62% expect no change. The 10 industries expecting capital expenditure increases for 2024 — listed in order — are: Food, Beverage & Tobacco Products; Furniture & Related Products; Nonmetallic Mineral Products; Primary Metals; Fabricated Metal Products; Petroleum & Coal Products; Chemical Products; Paper Products; Transportation Equipment; and Machinery.
Services
This year, services purchasing and supply executives expect capital expenditures to increase 1.4% compared to 2023. The 25% of respondents expecting to spend more predict an average increase of 16 percent, 12% anticipate an average decrease of 20.8%, and 63% expect no change in capital expenditures in 2024. The 10 industries expecting an increase in capital expenditures — listed in order — are: Public Administration; Utilities; Retail Trade; Accommodation & Food Services; Mining; Transportation & Warehousing; Professional, Scientific & Technical Services; Educational Services; Construction; and Finance & Insurance.
Prices — Changes Between End of 2023 and May 2024
Manufacturing
In the December forecast, respondents predicted an increase of 3.2% in prices paid during the first four months of 2024; they now report prices increased by 1.6%. The 45% who say their prices are higher now than at the end of 2023 report an average increase of 5.8 percent, while 17% reported lower prices (by 6 percent, on average). The remaining 39% indicated no change for the period. Seventeen manufacturing industries reported an increase in prices paid for the first part of 2024, listed in order: Textile Mills; Printing & Related Support Activities; Apparel, Leather & Allied Products; Plastics & Rubber Products; Nonmetallic Mineral Products; Primary Metals; Paper Products; Chemical Products; Computer & Electronic Products; Machinery; Miscellaneous Manufacturing; Fabricated Metal Products; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Furniture & Related Products; and Food, Beverage & Tobacco Products.
Services
Services respondents report that purchases during the first four months of this year cost an average of 2.3% more than at the end of 2023. This is 1.4 percentage points less than the 3.7% increase predicted in December. Forty-six percent of services respondents report that prices increased, on average, 6.7%; 11% report price decreases of, on average, 7.2%; and 43% indicate no change. Fourteen of 18 industries reported an increase in prices paid in the first part of 2024, listed in order: Public Administration; Management of Companies & Support Services; Utilities; Retail Trade; Professional, Scientific & Technical Services; Transportation & Warehousing; Construction; Educational Services; Finance & Insurance; Health Care & Social Assistance; Wholesale Trade; Arts, Entertainment & Recreation; Other Services; and Information.
Prices — Predicted Changes Between End of 2023 and End of 2024
Manufacturing
Survey respondents expect a year-over-year, net-average prices increase of 1.9% for 2024. With respondents reporting price increases of 1.6% through April 2024, prices are projected to increase slightly for the rest of the year. Forty-seven percent of respondents project prices to increase, on average, 6.1% for the full year, 20% anticipate a decrease (5.2%, on average), and 33% expect no change. The 15 industries expect price increases for all of 2024, listed in order are: Textile Mills; Apparel, Leather & Allied Products; Primary Metals; Plastics & Rubber Products; Nonmetallic Mineral Products; Chemical Products; Paper Products; Furniture & Related Products; Fabricated Metal Products; Transportation Equipment; Miscellaneous Manufacturing; Petroleum & Coal Products; Computer & Electronic Products; Electrical Equipment, Appliances & Components; and Machinery.
Services
This year, services respondents expect prices to increase, on average, 3.2% compared to the end of 2023. With respondents reporting an increase of 2.3% through April 2024, prices are projected to increase over the rest of the year. Forty-eight of respondents anticipate increases of, on average, 7.2%; 7% expect decreases of, on average, 5 percent; and 45% do not expect prices to change. Fifteen of 18 industries project price increases for all of 2024, listed in order: Public Administration; Retail Trade; Arts, Entertainment & Recreation; Utilities; Wholesale Trade; Management of Companies & Support Services; Construction; Health Care & Social Assistance; Professional, Scientific & Technical Services; Educational Services; Finance & Insurance; Transportation & Warehousing; Accommodation & Food Services; Information; and Other Services.
INDUSTRIAL SUPPLY MAGAZINE
The November/December issue of Industrial Supply magazine features an in-depth cover story about Kimball Midwest. Plus, we're featuring articles by contributing writers Dirk Beveridge, Frank Hurtte, and Mike Marks, as well as interviews with numerous product and distribution industry experts.
