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.
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.
These projections are part of the forecast issued by the Business Survey Committee of the Institute for Supply Management (ISM).
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 Bradley J. Holcomb, chair of the ISM Manufacturing Business Survey Committee. "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."
In the manufacturing sector, respondents report operating at 79.2 percent of their normal capacity, down from 83.2 percent reported in April 2011. Purchasing and supply executives predict that capital expenditures will increase by 1.9 percent in 2012 over 2011, compared to an 11 percent increase reported for 2011 over 2010.
Survey respondents also forecast that they will reduce inventories by 1.2 percent in an effort to improve their purchased inventory-to-sales ratio in 2012. Manufacturers have an expectation that employment in the sector will increase by 1.3 percent, while labor and benefit costs are expected to increase an average of 2.4 percent in 2012. Manufacturing purchasers are predicting growth in exports and imports in 2012. Respondents also expect the U.S. dollar to weaken very slightly on average against the currencies of major trading partners.