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Economic growth is expected to continue in the U.S. throughout 2018, say the nation's purchasing and supply executives in their Spring 2018 Semiannual Economic Forecast. Expectations for the remainder of 2018 continue to be positive in both the manufacturing and non-manufacturing sectors.
- Manufacturing Growth Continues in 2018
- Revenue to Increase 6.6%
- Capital Expenditures to Increase 10.1%
- Capacity Utilization Currently at 85.8%
- Non-Manufacturing Growth Continues in 2018
- Revenue to Increase 3.2%
- Capital Expenditures to Increase 6.8%
- Capacity Utilization Currently at 85.5%
62% of respondents from the panel of manufacturing supply management executives predict their revenues, on average, will be 11.6% greater in 2018 compared to 2017, 5% expect a 11.9% decline, and 33% foresee no change in revenue. This yields an overall average forecast of 6.6% revenue growth among manufacturers for 2018. This current prediction is 1.5%age points above the December 2017 forecast of 5.1% revenue growth for 2018 and is 2.5% age points above the actual revenue growth reported for all of 2017. With operating rate at 85.8%, an expected capital expenditure increase of 10.1%, an increase of 5% for prices paid for raw materials, and employment expected to increase by 1.8% by the end of 2018 compared to the end of 2017, manufacturing is positioned to grow revenues while managing costs through the remainder of the year. “With 15 of the 18 manufacturing sector industries predicting revenue growth in 2018, when compared to 2017, U.S. manufacturing continues to move in a positive direction. However, finding and onboarding qualified labor and being able to pass on raw material price increases will ultimately define manufacturing revenues and profitability,” says Fiore.
The manufacturing panel was also asked Special Questions related to the impact thus far in 2018 on the following: (1) In the past six months, has your firm had difficulty hiring workers to fill open positions? (2) In the past six months, has your firm raised wages to recruit new hires? (3) In the past six months, has your firm offered additional training for new hires? (4) In the past six months, has your firm increased, decreased or left unchanged its capital spending plans for the next 12 months? And why did you say so? (5) Do you believe that tariffs will raise the price of the goods that you produce and deliver to your customers? (6) If you believe that tariffs will raise the price of your goods to your customers, by how much? (7) Do you believe that tariffs will cause delays and disruptions in your supply chain? Their responses are provided at the end of this report.
Forty-nine% of non-manufacturing purchasing and supply executives expect their 2018 revenues to be greater by 7.1% as compared to 2018. Respondents currently expect a 3.2% net increase in overall revenue, which is less than the 6% increase that was forecasted in December 2017. “Non-manufacturing will continue to grow for the balance of 2018. Non-manufacturing companies continue to operate efficiently, which is reflected by the high%age of capacity utilization. Supply managers have indicated that prices are projected to increase 2.1% over the year. Employment is projected to grow 1.5%. Sixteen out of 18 industries are forecasting increased revenues, which is fewer than the 17 industries that forecasted increased revenues last year. The non-manufacturing sector will continue economic growth throughout the year,” says Nieves.
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