Manufacturing revenue to rise 4.8% in 2020, survey shows

by Talk Business & Politics staff (staff2@talkbusiness.net) 95 views 

Manufacturers are optimistic about growth in 2020, with all 18 manufacturing industries expecting revenue to rise, according to the Institute for Supply Management (ISM). Meanwhile, the U.S. economy is expected to continue to grow in 2020 as expectations for continued growth began in mid-2009.

Revenue in the manufacturing sector is expected to increase by 4.8% as capital expenditures are expected to fall by 2.1% in 2020. Capital expenditures rose 6.4% in 2019. Employment in the sector is projected to increase by 0.1% in 2020.

The projections are part of the forecast released by the Business Survey Committee of the ISM, which releases the Purchasing Managers’ Index (PMI) each month.

The survey shows that 58% of respondents expect revenues to rise in 2020, from 2019. Respondents expected a 1.9% increase in revenue in 2019, from 2018. They are optimistic about the overall business prospects for the first half of 2020 and expect business to continue to expand through the second half of 2020, according to ISM.

“Manufacturing experienced eight consecutive months of growth from December 2018 through July 2019,” said Timothy Fiore, chair of the Business Survey Committee. “However, manufacturing contracted during the period from August 2019 through November 2019. This resulted in an average PMI of 51.8%, as compared to 59.2% for the 12 months ending November 2018.” A PMI reading above 50% indicates the manufacturing economy is expanding and below 50% indicates it’s contracting.

Survey respondents expect raw materials pricing pressures to increase and profit margins to improve in 2020, from 2019. Manufacturers also expect exports and imports to rise in 2020. They have been operating at 83.7% of their normal capacity, and this is down 0.5 percentage points from 84.2% in May 2019. Labor and benefits costs are expected to increase by 0.7% in 2020. Respondents also expect the U.S. dollar to increase in strength compared to all seven currencies of major trading partners in 2020, similar to 2019.

Prices paid for raw materials are projected to increase by 0.4% in the first five months of 2020 and have an overall increase of 1.1% in 2020. Raw materials prices rose 0.7% in 2019, from 2018.

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