iStock/Getty Images
Industryweek 36695 Factory Exterior Istock Getty
Industryweek 36695 Factory Exterior Istock Getty
Industryweek 36695 Factory Exterior Istock Getty
Industryweek 36695 Factory Exterior Istock Getty
Industryweek 36695 Factory Exterior Istock Getty

US Manufacturers Plan First Pullback in Investment Since 2009: ISM Survey

Dec. 9, 2019
38% of companies cited domestic economic conditions as the main reason fora adjusting their spending plans, according to a survey from the Institute for Supply Management.

U.S. manufacturers expect to reduce capital spending in 2020, a trend that could limit a rebound in the sector even as companies see profits improving.

Factory executives forecast capital expenditures will decrease 2.1% in 2020, which if realized would be the first annual decline in 11 years, according to a semiannual survey from the Institute for Supply Management released Monday. That compares to a reported increase of 6.4% in 2019. Managers at non-manufacturing firms expect a 1.3% rise next year, slower than 2019’s increase of 2%.

While the group’s monthly data show the manufacturing sector is currently contracting, the report indicates a turnaround may begin in the first half of 2020 and pick up later in the year. Factories remain in a fragile position after tumbling into recession earlier this year, though concerns have abated that the weakness will spread into the broader economy amid strong job gains.

Even so, companies across the economy have held off on long-term investments amid uncertain trade policies, escalating tariffs and a moderating growth outlook. The pullback weighed on economic growth in both the second and third quarters.

A plurality of companies, about 38%, cited domestic economic conditions as the main reason for adjusting capital-spending plans, while just 3% blamed tariffs. About 44% cited other unspecified factors.

At the same time, about a third of factory respondents expect profit margins to improve between now and May, while 21% expect lower margins and 46% predict no change. Revenue is expected to increase 4.8%.

The ISM declined to disclose the number of companies who responded to the survey beyond saying it’s the same panel for the monthly PMI reports. ISM asked respondents to report toward the end of November, research manager Kristina Cahill said.

Popular Sponsored Recommendations

The Ultimate Guide for Surviving Economic Uncertainty & Supply Chain Disruption

March 13, 2024
Are disruptive external forces putting a squeeze on your supply chain? Nulogy can help. Access our Survival Guide to uncover 5 critical areas of investment for external supply...

Executive Summary: Enterprise Resource Planning Manages Manufacturing Risk and Uncertainty in 2024

Jan. 4, 2024
Explore the future of manufacturing in 2024 by discovering how cloud-based ERP systems can help manufacturers thrive amidst supply chain disruptions and economic uncertainty.

Lufthansa Technik Soars to New Heights in Manufacturing and Service by Implementing a Digital Thread

Feb. 22, 2024
Learn how Lufthansa Technik is leveraging digitalization to find efficiencies to keep costs down, while keeping customer satisfaction high & increasing quality.

The Next-Gen Strategy for Delivering on Your Supply Chain Commitments

March 26, 2024
Manufacturers are struggling to provide the necessary customer experience to their external ecosystem. Read this whitepaper to learn about supply chain convergence – and why it...

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!