Manufacturing to See Marginal Growth Rest of 2008

May 9, 2008
Revenue is expected to increase 1%

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. The projection is part of the forecast issued by the Institute for Supply Management.

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

With operating capacity at 78.6%, expected capital investment growth at 1% and prices expected to increase 8.5% during 2008, manufacturers will need to focus on cost cutting to offset lower revenue growth and higher input prices.

"On average, respondents are concerned about their organizations' prospects for 2008," said Ore. Norbert J. Ore, C.P.M., chair of the ISM Manufacturing Business Survey Committe

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.

Purchasing and supply managers report that their companies are currently operating at 78.6% of normal capacity, representing a decline from the 82.9% reported in December 2007 and the 82.8% reported in April 2007.

Production capacity is expected to increase 2.5% in 2008. This is significantly less than the 11.3% predicted in December 2007.

Employment will increase 2.9% in 2008, with 19% expecting employment to be 25% higher. This is in contrast to the 25% who predict employment to be lower by 7.1%. The remaining 56% of respondents expect their employment levels to be unchanged in 2008.

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