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Expectations Weaken for Manufacturing in 2009

May 6, 2009

The Institute for Supply Management has released its spring 2009 Semiannual Economic Forecast, which shows that expectations for the remainder of 2009 have weakened in both the manufacturing and non-manufacturing sectors.

The manufacturing summary, as presented by ISM:

While 15% of respondents predict revenues to be 13.7% greater in 2009 than in 2008, an overall revenue decrease of 14.7% is expected for manufacturing as 67% expect a 25.2% decline, and 18% expect no change. This represents a significant decline in expectations from December 2008 when the panel of supply management executives predicted a 1.1% decrease in 2009 revenues compared to 2008. With operating capacity at 67%, an expected capital investment decline of 22.7% and prices expected to decrease 5.3% during 2009, manufacturers will need to focus on cost-cutting to offset lower revenue.

Food, Beverage & Tobacco Products is the only manufacturing industry expecting a revenue increase in 2009.

The non-manufacturing summary:
Fifty percent of non-manufacturing purchasing and supply executives expect their 2009 revenues to be lower by 14.5% than in 2008. Overall, respondents currently expect a 5.1% net decrease in overall revenues, much lower than the 0.7% increase that was forecast in December 2008.

Non-manufacturing industries expecting increases in revenue in 2009 are: Finance & Insurance; and Other Services.

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