ISM Says 2009 will be Tough Year for U.S. Manufacturing

Dec. 9, 2008
Study says manufacturers lack their usual optimism

Expectations for 2009 are for the adverse conditions experienced in the second half of 2008 to continue in manufacturing, according to December Economic Report from the Institute of Supply Management (ISM).

"Manufacturing purchasing and supply executives lack their usual optimism about their organizations' prospects as they consider the first half of 2009; however, they are somewhat more positive about the second half," said Norbert Ore of ISM. "While 2008 has been a challenging year overall, we are apparently seeing a rapid halt to the inflationary cycle of the past several years as it relates to manufacturing inputs. Respondents expect cost pressures to stabilize in the second half of 2009 based on their overall price forecast. Manufacturing growth is now in its fourth consecutive month of contraction as measured by and reported in the monthly Manufacturing ISM Report On Business."

Overall attitude of manufacturing management: pessimistic, with 80% of respondents predicting 2009 will be the same as or worse than 2008.

Purchasers forecast that 2009 will be worse than 2008 as measured by their revenue expectations. The 35% of respondents forecasting better business in 2009 than in 2008 estimate an average nominal (before adjusting for inflation) increase of 9% in their organizations' revenues. This is in contrast to an average nominal decrease of 11.2% forecast by the 38% who predict worse business in 2009. Including the 27% who see no change in 2009, the forecast for overall net nominal decline in business revenues for 2009 over 2008 is 1.1%.

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