Manufacturing Growth to Be 'Marginal' in 2008

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May 6, 2008

Manufacturing Growth to Be 'Marginal' in 2008

Economic growth in the U.S. is sustainable throughout the remainder of 2008, say the nation's purchasing and supply executives in their spring 2008 Semiannual Economic Forecast. These projections are part of the forecast issued by the Business Survey Committee of the Institute for Supply Management.

Overview

Manufacturing Growth Marginal in 2008
Revenue to Increase 1%
Capital Investment to Increase 1%
Capacity Utilization at 78.6%

Non-Manufacturing Growth Sustainable in 2008
Revenue to Increase 2.7%
Capital Investment to Decrease 2.7%
Capacity Utilization at 85.9%

Manufacturing Summary

While 42 percent of respondents predict revenues to be 9.2 percent greater in 2008 than in 2007, the overall expected revenue increase is only 1 percent for manufacturing as 31 percent expect a 9.3 percent decline, and 27 percent expect no change.

his represents a significant decline in expectations from December 2007 when the panel of supply management executives predicted a 6.8 percent increase in 2008 revenues. With operating capacity at 78.6 percent, expected capital investment growth at 1 percent and prices expected to increase 8.5 percent during 2008, manufacturers will need to focus on cost cutting to offset lower revenue growth and higher input prices.

The manufacturing industries expecting the greatest revenue increases in 2008 — listed in order — are: Electrical Equipment, Appliances & Components; Primary Metals; Miscellaneous Manufacturing; Machinery; Food, Beverage & Tobacco Products; Paper Products; Plastics & Rubber Products; and Chemical Products.

Non-Manufacturing Summary

Forty-three percent of non-manufacturing purchasing and supply executives expect their 2008 revenues to be greater than in 2007. Overall, respondents currently expect a 2.7 percent net increase in overall revenues, greater than the 2 percent increase that was forecast in December 2007.

Non-manufacturing industries expecting increases in revenue at or above the average of 2.7 percent in 2008 are: Construction; Professional, Scientific & Technical Services; Wholesale Trade; Agriculture, Forestry, Fishing & Hunting; Other Services; Retail Trade; and Utilities.

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