Subscribe to our free, weekly email newsletter!


ISM semiannual report points to economic growth for remainder of 2013

By Jeff Berman, Group News Editor
May 01, 2013

In its spring 2013 Semiannual Economic Forecast, the Institute for Supply Management (ISM) is pointing to economic growth for the rest of the year in the manufacturing and non-manufacturing sectors.

The report is based on feedback from U.S.-based purchasing and supply chain executives, manufacturing and non-manufacturing sectors.

For manufacturing, the report said manufacturing revenue is expected to increase 4.8 percent through the end of 2013, with capital investment expected to grow at a 9.1 percent clip, and capacity utilization at 80.2 percent. 

Other manufacturing-related metrics cited in the report included: production capacity being expected to increase 6.7 percent in 2013, just under December’s 6.8 percent prediction; prices expected to increase 2.3 percent for 2013, with 55 percent of ISM member respondents noting they expected a 5.6 percent uptick in rates; and employment seeing a 0.9 percent gain.

Looking at manufacturing revenues, Brad Holcomb, chair of the ISM Manufacturing Survey Business Committee, said in an interview that the expected 4.8 percent gain is up from December’s 4.6 percent and represents a meaningful increase from 2012’s 4.0 percent.

“The only industry reporting a slight expected decline is transportation, which includes aircraft, and is undoubtedly impacted by reduced government defense spending, but on the whole it is a positive number, which represents growth.

For non-manufacturing, the ISM report expects revenue to increase 3.5 percent, with capital investment expected to rise 3.6 percent. Non-manufacturing capacity utilization is expected to be at 84.7 percent.

Non-manufacturing production capacity is expected to increase by 2.3 percent, and prices are expected to rise 2.4 percent, and employment is expected to go up1.3 percent.

“For non-manufacturing revenues, we see it being down slightly from 4.3 percent at the end of 2012 to 3.5 percent now,” said Tony Nieves, chair of the ISM’s Non-Manufacturing Business Survey Committee. “It has to do with confidence, and we also see it with capital reinvestment, too, and also correlate to the flat rate we are seeing for employment. All of these things together speak to the uncertainty still on the horizon.”

But Nieves cautioned it is not all gloom and doom for non-manufacturing, with plenty of positives in the mix, including strong construction sector revenue growth, which is in sync with what is happening on the manufacturing side as it relates to things like housing starts and other facets of the economy.

With capital investments pegged at 9.1 percent and 3.6 percent, respectively, for manufacturing and non-manufacturing, Holcomb and Nieves made their cases for what is driving these figures.

For manufacturing, Holcomb pointed to how it checked in ahead of December’s 7.6 percent estimate, adding that it “speaks to the optimism of manufacturing” and how ISM respondents feel about their company’s bookings and new orders in the coming months.

“I am actually quite surprised at how strong that number is,” explained Holcomb. “It is pretty broad-based and is also a flexible number as procurement officers keep a close eye on company purse strings.”

For non-manufacturing capital investments, Nieves pointed out how in 2012 they exceeded what was predicted for 2012, with the confidence carried over into early 2013 which has since followed into 2013 as companies maintain a conservative approach to capital reinvestment.

Capacity utilization at 80.2 percent and 84.7 percent, respectively, for manufacturing and non-manufacturing are in fairly decent ranges, according to Holcomb and Nieves.

“We would consider full manufacturing operating capacity at 85 percent so there is plenty of upside capacity at the moment,” said Holcomb. “It is a good strong number.”

If the figure rose in conjunction with increased capital expenditures, Holcomb said he would expect capacity to rise, with these figures sort of serving as moving targets.

Nieves said that the 84.7 rate for non-manufacturing reflects how the sector largely continues to do well.

“We continually hear the cliché of ‘doing more with less,’ and we saw a bit of a pop in employment in the more labor-intensive non-manufacturing industries, and now there is a little fall off in things like new orders in recent months, so this speaks to that,” he said. “It is still a very strong operating rate. I like to say if you look at the revenues being off a little bit and operating where it is, it means there is more margin in it.”

About the Author

image
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff joined the Supply Chain Group in 2005 and leads online and print news operations for these publications. In 2009, Jeff led Logistics Management to the Silver Medal of Folio’s Eddie Awards in the Best B2B Transportation/Travel Website category. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. If you want to contact Jeff with a news tip or idea,
please send an e-mail to .(JavaScript must be enabled to view this email address).


Subscribe to Modern Materials Handling magazine

Subscribe today. It's FREE!
Find out what the world’s most innovative companies are doing to improve productivity in their plants and distribution centers.
Start your FREE subscription today!

Recent Entries

This complimentary white paper addresses areas of potential benefit to a grocery distributor considering an investment in automated case picking technology.

In 2015, a new era in shipment pricing will go into effect when major carriers implement dimensional ("dim") weight pricing for all ground packages regardless of their size. This complimentary white paper, "Dimensional Weight: Don't Let it Weigh You Down", can help you optimize your packaging operation to minimize the financial impacts of dimensional weight pricing.

Replacing older, less-efficient lift trucks at the right time can reduce your maintenance costs, improve your productivity and, most importantly, save money and maximize your return on investment. So how do you determine the right time to make a new, significant purchase? Download this complimentary white paper for guidance on how to determine the ideal time to replace lift trucks and how planned replacement can benefit your operation.

The prolonged operating hours of automated distribution operations leave limited time for maintenance. For tightly-scheduled fulfillment operations, unplanned downtime not only cuts into slim profit margins, it jeopardizes future business and customer loyalty. Download this complimentary white paper to learn five mission-critical benefits of implementing a resident maintenance program.

Debut of Pharma EXPO plays crucial role in increase.

Article Topics

News · ISM · Non-manufacturing · All topics

About the Author

Josh Bond, Associate Editor
Josh Bond is an associate editor to Modern. Josh was formerly Modern’s lift truck columnist and contributing editor, has a degree in Journalism from Keene State College and has studied business management at Franklin Pierce. Contact Josh Bond


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA