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Purchasing Executives Expect Slow Growth in Manufacturing
May 10, 2008
a 1 percent increase in capital expenditures in 2008. Currently, 29 percent of respondents predict increased capital expenditures in 2008 with an average increase of 37.4 percent, while the 30 percent who said their capital spending would be reduced report an average decrease of 32.9 percent. Forty-one percent say they will spend the same in 2008 as they did in 2007.
Industries predicting an increase above 1 percent are: Primary Metals; Paper Products; Printing &Related Support Activities; Transportation Equipment; Miscellaneous Manufacturing ; Machinery; and Petroleum &Coal Products.
Non-manufacturing purchasing and supply executives are expecting to decrease their level of capital expenditures 2.7 percent in 2008 compared to 2007.
Prices: Predicted Changes Between End of 2007 and End of 2008 When asked to predict 2008 price changes, 85 percent of manufacturing respondents expect prices they pay to increase by 10.3 percent. At the same time, 7 percent anticipate decreases averaging 3.9 percent. Including the 8 percent who expect no change in prices, survey respondents expect net average prices to increase 8.5 percent for 2008, which is greater than the December 2007 prediction of 4.3 percent.
Industries predicting increases in prices greater than 6 percent for all of 2008 are: Petroleum &Coal Products; Fabricated Metal Products; Food, Beverage &Tobacco Products; Nonmetallic Mineral Products; Machinery; Printing &Related Support Activities; Chemical Products; and Transportation Equipment.
Non-manufacturing respondents expect prices they pay to increase an average of 6.7 percent over the entire year. Eighty-one percent of the respondents anticipate price increases averaging 8.6 percent. Five percent of the respondents expect decreases of 7.2 percent, and 14 percent do not expect prices to change.
Change in Overall Employment: Balance of 2008 Manufacturing respondents forecast that manufacturing employment will increase 2.9 percent in 2008, with 19 percent expecting employment to be 25 percent higher. This is in contrast to the 25 percent who predict employment to be lower by 7.1 percent. The remaining 56 percent of respondents expect their employment levels to be unchanged in 2008. Non-manufacturing respondents forecast that employment will increase 0.7 percent during the balance of 2008. For the remaining months of 2008, 21 percent expect higher levels of employment, 21 percent anticipate lower levels and 58 percent expect their employment levels to be unchanged.
Business Revenues -2008 vs. 2007 Looking ahead, expectations are modest for increased revenues in manufacturing in 2008 as purchasing and supply management executives indicate an overall net nominal increase of 1 percent in business revenues for 2008 over 2007.
This is significantly less than the 6.8 percent increase that was forecast in December 2007 for all of 2008, and less than the 2.4 percent reported for 2007.
Forty-two percent of respondents say that nominal revenues (before adjusting for inflation) will increase an average of 9.2 percent over 2007.
Conversely, 31 percent say their nominal revenues will decrease an average of 9.3 percent, and the remaining 27 percent indicate no change.
Non-manufacturing respondents forecast that business revenues for 2008 will increase 2.7 percent compared to 2007.