Economic growth in the United States will continue in 2015, say the nation’s purchasing and supply management executives in their December 2014 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 2015, with revenues expected to increase in 15 Manufacturing industries, and the Non-Manufacturing sector also predicts that 15 of its industries will see higher revenues. Capital expenditures, a major driver in the U.S. economy, are expected to increase by 3.7 percent in the Manufacturing sector and by 3.8 percent in the Non-Manufacturing sector. Manufacturing expects that its employment base will grow by 1.5 percent, while Non-Manufacturing expects employment growth of 1.7 percent.
These projections are part of the forecast issued by the Business Survey Committee of the Institute for Supply Management® (ISM®). The forecast was released today by Bradley J. Holcomb, CPSM, CPSD, chair of the ISM Manufacturing Business Survey Committee, and by Anthony S. Nieves, CPSM, C.P.M., CFPM, chair of the ISM Non-Manufacturing Business Survey Committee.
Expectations for 2015 are positive as 67 percent of survey respondents expect revenues to be greater in 2015 than in 2014. The panel of purchasing and supply executives expects a 5.6 percent net increase in overall revenues for 2015, compared to a 3.6 percent increase reported for 2014 over 2013 revenues. The 15 manufacturing industries expecting revenue improvement in 2015 over 2014 — listed in order — are: Food, Beverage & Tobacco Products; Furniture & Related Products; Computer & Electronic Products; Fabricated Metal Products; Miscellaneous Manufacturing; Machinery; Nonmetallic Mineral Products; Printing & Related Support Activities; Paper Products; Chemical Products; Transportation Equipment; Textile Mills; Primary Metals; Plastics & Rubber Products; and Electrical Equipment, Appliances & Components
“Manufacturing purchasing and supply executives expect to see continued growth in 2015. They are optimistic about their overall business prospects for the first half of 2015, and are similarly optimistic about the second half of 2015,” said Holcomb. “Manufacturing experienced 18 consecutive months of growth from June 2013 through November 2014, as reported in the monthly Manufacturing ISM Report On Business®, and our forecast calls for a continuation of growth in 2015, building on the momentum reported in 2014. Respondents expect raw materials pricing pressures in 2015 to be low, similar to levels experienced in 2014, and expect their margins will improve in 2015. Manufacturers are also predicting growth in both exports and imports in 2015 over 2014.”
In the manufacturing sector, respondents report operating at 83.7 percent of their normal capacity, up 1.4 percentage points from the 82.3 percent reported in April 2014. Purchasing and supply executives predict that capital expenditures will increase by 3.7 percent in 2015 over 2014, compared to a 14.7 percent increase reported for 2014 over 2013. Manufacturers have an expectation that employment in the sector will increase by 1.5 percent in 2015, while labor and benefit costs are expected to increase an average of 3.2 percent. Respondents also expect the U.S. dollar to strengthen against all seven currencies of major trading partners in 2015.
The panel also predicts the prices paid for raw materials will increase 1.2 percent during the first four months of 2015, and will increase an additional 0.3 percent during the balance of the year, with an overall increase of 1.5 percent for 2015. This compares to a reported 1.4 percent increase in raw materials prices for 2014 compared with 2013.
Two special questions were asked of our Panel. The first special question asks about unfilled job openings. The top three responses from our Manufacturing panel, with percentages of the total number of responses noted, were “Currently have a typical number of unfilled job openings” (39.5%), “Cannot find enough qualified applicants to fill job openings” (28.8%), and “Hiring less than usual due to economic uncertainty” (18.6%).
The second special question asked whether Manufacturing organizations plan to re-shore significant volumes of manufacturing/business processes in 2015. Of the three possible answers, 10.4 percent responded “Yes,” 58.8 percent responded “No,” and 30.8 percent responded “Not Applicable.” For those organizations that responded “No,” the most often cited main reason for not re-shoring in 2015 was that the “Cost advantage of off-shoring was still too favorable,” with 53.7 percent of all respondents providing that reason.