The manufacturing sector looks to contract in 2020 as the U.S. economic downturn is expected to continue through the remainder of the year despite projections that have been clouded by the COVID-19 (coronavirus) pandemic, according to a survey from the Institute for Supply Management (ISM).
The ISM recently announced the Spring 2020 Semiannual Economic Forecast that comprises a survey of U.S. purchasing and supply executives. The ISM also releases the Purchasing Managers’ Index in its Manufacturing ISM Report on Business each month.
Manufacturing revenue is expected to fall 10.3% on average in 2020. This compares with a revenue increase of 1.9% in 2019, from 2018.
In the survey, 18% of respondents said revenues will increase by 10.6% on average in 2020, from 2019. But 58% of respondents said their revenues will fall 21.2% on average. The remaining respondents expect revenue to be flat.
Manufacturing is currently operating at 75.9% capacity. As of the end of 2020, the following are the expectations for manufacturing components that have been affected as a result of the pandemic: Capital expenditures are expected to fall by 19.1%, prices paid for raw materials are expected to decrease 1.6% and employment is projected to decline 5.3%.
“With 15 of the 18 manufacturing sector industries — including five of the six big industry sectors — predicting revenue declines for 2020, panelists forecast that recovery will likely not occur until near the end of the year,” said Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee. “The sectors’ responses were consistent with the industry-performance reports in April’s Report on Business.”
The industries that expect revenue growth in 2020 are apparel, leather and allied products; and food, beverage and tobacco products. A total of 15 manufacturing industries expect revenue declines for the year.