NEW YORK – The U.S. economy will resume growing in 2010, with manufacturers expecting sales revenue to increase 5.7% and non-manufacturers expecting 1.3% revenue growth next year, according to the Institute for Supply Management December 2009 Semiannual Economic Forecast.
Manufacturers see capital expenditures falling 4%, while non-manufacturers see a 6.7% decline in capital expenditures.
“The manufacturing sector overall is positive about prospects in 2010 with revenues expected to increase in 13 of 18 industries, while the non-manufacturing sector appears slightly less positive about the year ahead with 8 of 18 industries expecting higher revenues,” according to the survey. “Business investment, a major driver in the U.S. economy, will decline as both sectors expect a combined average of a 5.4 percent decline in capital spending.”
"Manufacturing purchasing and supply executives reflect more of their typical optimism about their organizations' prospects as they consider the first half of 2010,and they are even more positive about the second half," said Norbert J. Ore, CPSM, chair of the ISM Manufacturing Business Survey Committee. "While 2009 has been a challenging year overall, we are in a growth trend as we approach the end of the year. Respondents expect cost pressures to be low to moderate based on their price forecast.”
In the manufacturing sector, respondents report operating at 70.1% of their normal capacity, up from 67% reported in April 2009.
Additionally, those responding to the survey see reduced inventories, a 1.5% increase in employment, with a 1.4% rise in labor and benefits costs, and see the dollar weakening.
Respondents also predicted prices paid will increase 0.2% during the first four months of 2010, and will increase an additional 2.4% during the balance of 2010, with an overall increase of 2.6% for 2010. “Respondents' major concerns are: weak economy; credit crisis; taxes; interest rates; and high energy costs. Survey respondents expect to realize supply chain improvements through supplier consolidation; new or improved enterprise technology and system utilization; improved inventory/asset management; lean manufacturing; and cost reduction,” the report said.
