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ISM Forecast: Economic Growth Expected in 2013

Date: Dec 12, 2012 @ 07:06 AM
Filed Under: Economic Commentary

Economic growth in the United States will continue in 2013, say the nation's purchasing and supply management executives in their December 2012 Semiannual Economic Forecast. Expectations are for a continuation of the economic recovery that began in mid-2009, as indicated in the monthly ISM Report On Business.

The manufacturing sector is optimistic about growth in 2013, with revenues expected to increase in 17 manufacturing industries, and the non-manufacturing sector predicts that 14 of its industries will see higher revenues.

Capital expenditures, a major driver in the U.S. economy, are expected to increase by 7.6 percent in the manufacturing sector and by 7 percent in the non-manufacturing sector. Manufacturing, however, expects that its employment base will grow by less than 1 percent, while non-manufacturing expects employment growth of 1.3 percent.

Manufacturing Summary

Expectations for 2013 are positive as 62 percent of survey respondents expect revenues to be greater in 2013 than in 2012. The panel of purchasing and supply executives expects a 4.6 percent net increase in overall revenues for 2013, compared to a 4 percent increase reported for 2012 over 2011 revenues.

The 17 manufacturing industries expecting revenue improvement over 2012 — listed in order — are: Primary Metals; Petroleum & Coal Products; Computer & Electronic Products; Wood Products; Furniture & Related Products; Printing & Related Support Activities; Food, Beverage & Tobacco Products; Paper Products; Chemical Products; Plastics & Rubber Products; Apparel, Leather & Allied Products; Miscellaneous Manufacturing; Transportation Equipment; Machinery; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; and Fabricated Metal Products.

In the manufacturing sector, respondents report operating at 77.5 percent of their normal capacity, down from 81.6 percent reported in April 2012. Purchasing and supply executives predict that capital expenditures will increase by 7.6 percent in 2013 over 2012, compared to a 3.7 percent increase reported for 2012 over 2011. Survey respondents also forecast that they will increase inventories by 0.3 percent to support their planned level of sales in 2013.

Survey respondents report that the most challenging problems facing their businesses as they plan for 2013 are: poor sales (37.8 percent); government regulations (30.5 percent); inflation (9.8 percent); taxes (9.1 percent); quality of labor (4.9 percent); interest rates and finance (4.3 percent); and cost of labor (3.7 percent).

Non-Manufacturing Summary

Fifty-nine percent of non-manufacturing supply management executives expect their 2013 revenues to be greater than in 2012. They currently expect a 4.3 percent net increase in overall revenues for 2013 compared to a 3.4 percent increase reported for 2012 over 2011 revenues.

The 14 non-manufacturing industries expecting revenue improvement in 2013 over 2012 — listed in order — are: Construction; Professional, Scientific & Technical Services; Other Services; Management of Companies & Support Services; Real Estate, Rental & Leasing; Wholesale Trade; Retail Trade; Transportation & Warehousing; Accommodation & Food Services; Arts, Entertainment & Recreation; Finance & Insurance; Information; Public Administration; and Health Care & Social Assistance.

Non-manufacturing supply managers forecast that their capacity to produce products and provide services will rise by 3.4 percent during 2013, and capital expenditures will increase by 7 percent from the 2012 levels.

Read the full ISM December 2012 Semiannual Economic Forecast.

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