The manufacturing sector is optimistic about growth in 2019, and revenues are expected to rise in 17 manufacturing industries, according to the Institute for Supply Management (ISM). Expectations for growth that started in mid-2009 are indicated on the monthly ISM Report On Business, and the growth projections for 2019 were recently released by the ISM Business Survey Committee.
Capital expenditures are expected to rise by 6%, and employment should rise by 2.4% in the manufacturing sector.
In a manufacturing sector survey by ISM, 64% of respondents expect revenues to rise in 2019, from 2018. Revenue is expected to increase by 5.7% in 2019, compared to a 5.1% increase projected for 2018, from 2017. Following are some of the 17 industries that expect revenue to rise: wood products, fabricated metal products, printing and related support activities, primary metals, apparel, transportation equipment, furniture and related products, chemical products, electrical equipment, paper products, computer and electronic products, textile mills, machinery, plastics and rubber products, and food, beverage and tobacco products.
“Manufacturing purchasing and supply executives expect to see growth in 2019,” said Timothy Fiore, chair of the ISM Business Survey Committee. “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. In 2018, manufacturing experienced 12 straight months of growth from December 2017 through November 2018, resulting in an average PMI of 59.2%, as compared to 57% 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.” A PMI (Purchasing Managers’ Index) above 50% means the manufacturing economy is expanding.
The manufacturing sector is operating at 85.2% of normal capacity, down 60 basis points from May 2018. Labor and benefits costs are expected to increase 2.5% in 2019, and the U.S. dollar should strengthen compared to all seven currencies of major trading partners in 2019. Raw materials prices should rise by 3.5% in the first five months of 2019, and 3.3% for 2019. In 2018, the price increase was 2%.