A majority of U.S. manufacturing executives expect their sales will grow a little more than 9 percent for the rest of 2014, according to the Institute of Supply Management’s semi-annual survey of purchasing and supply managers. Of the 18 industries predicting growth, computer and electronics products fall a disappointing 12th on the list. Textile manufacturers expect the most growth during 2014.
Sixty-eight percent of respondents to the survey predict their revenue will be 9.1 percent greater in 2014 compared to 2013; nine percent expect a 9.6 percent decline; and 23 percent foresee no change.
“With all 18 industries within the manufacturing sector predicting growth in 2014, when compared to 2013, U.S. manufacturing continues to demonstrate its broad-based strength, efficiency and leadership in the world economy,” said Bradley J. Holcomb, chair of the ISM Manufacturing Business Survey Committee.
The average expectation of revenue growth, said the ISM, is 5.3 percent, which is a notable increase of 0.9 percentage point from December 2013 when the panel predicted a 4.4 percent increase in 2014 revenues. With operating capacity at 82.3 percent, the association reports, an expected capital expenditure increase of 10.3 percent, prices paid expected to increase a modest 0.2 percentage point from now through the end of 2014, and employment expected to grow 1.5 percent for the balance of 2014, manufacturers are positioned to grow revenues while containing costs through the remainder of the year.
The 18 industries reporting expectations of growth in revenue for 2014 — listed in order — are: textile mills; printing and related support activities; furniture and related products; food, beverage and tobacco products; fabricated metal products; transportation equipment; plastics and rubber products; paper products; miscellaneous manufacturing; nonmetallic mineral products; chemical products; computer and electronic products; primary metals; petroleum and coal products; electrical equipment, appliances and components; wood products; machinery; and apparel, leather and allied products.
- Capacity: This year’s 82.3 percent capacity level represents an increase from the 80.3 percent reported in December 2013, as well as an increase from the 80.2 percent reported in April 2013. Production capacity in manufacturing is expected to increase 4.8 percent in 2014. This increase is considerably less than the 6.3 percent increase predicted in December 2013 for 2014, and also less than the 5.2 percent increase reported in December for 2013. This nevertheless reflects the continuing strength in the sector as 44 percent of respondents expect an average capacity increase of 12.7 percent, 8 percent expect decreases averaging 11 percent, and 48 percent expect no change.
- Pricing: In the ISM’s December 2013 forecast, respondents predicted an increase of 1.2 percent in prices paid during the first four months of 2014. They now report prices have increased 1.3 percent for the period. The 43 percent who say their prices are higher now than at the end of 2013 report an average increase of 4.4 percent, while the 17 percent who report lower prices report an average decrease of 3.8 percent. The remaining 40 percent indicate no change for the period.When asked to predict 2014 price changes, 48 percent of respondents expect the prices they pay to increase by 4.7 percent for the full year of 2014 compared to the end of 2013. At the same time, 19 percent anticipate decreases averaging 3.7 percent. Including the 33 percent who expect no change in prices, survey respondents expect net average prices to increase 1.5 percent for the entire year of 2014, indicating that prices are expected to rise an additional 0.2 percentage point for the remainder of the year.
- Employment: ISM’s Manufacturing Business Survey respondents forecast that manufacturing employment will increase 1.5 percent during the balance of 2014, with 38 percent expecting employment to be 6.6 percent higher. Fifteen percent of respondents predict employment to be lower by 6.6 percent. The remaining 47 percent of respondents expect their employment levels to be unchanged for the remainder of 2014.
- Winter 2013/2014: The ISM asked the manufacturing panel to comment on the potential impact the harsh winter weather had on new orders, production and employment. In terms of new orders, 51.3 percent of respondents indicated no impact, 34.2 percent indicated that the impact was short-term, 6 percent indicated that the impact was long-term, and 8.5 percent were unsure of the extent of the impact. For production, 52.8 percent of respondents indicated no impact, 34.2 percent indicated that the impact was short-term, 7.5 percent indicated that the impact was long-term, and 5.5 percent were unsure of the extent of the impact. Finally, for employment, 78.5 percent of respondents indicated no impact, 12.5 percent indicated that the impact was short-term, 3 percent indicated that the impact was long-term, and 6 percent were unsure of the extent of the impact.