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Manufacturing Forecast to Continue Expanding in 2019

Bill Koenig
By Bill Koenig Senior Editor, SME Media

Purchasing and supply executives expect manufacturing to continue expanding in 2019, according to a survey by the Institute for Supply Management.

Revenue for manufacturers is forecast to rise 4 percent in 2019, Tempe, Ariz.-based ISM said today. That’s less than a forecast revenue boost of 5.7 percent issued in December.

Nevertheless, respondents in 17 of 18 industries said they expect revenue growth this year.

The survey also yielded a forecast of increased capital expenditures of 5.9 percent this year, the institute said. Factories are running at 84.2 percent of capacity, according to the survey. That’s down 1 percentage point from the most recent survey in December. Production capacity is forecast to increase by 4.5 percent.

The respondents are from the same group that ISM surveys monthly while computing its manufacturing index known as the PMI.

“U.S. manufacturing continues to move in a positive direction,” Timothy R. Fiore, chair of ISM’s Manufacturing Business Survey Committee, said in a statement. ” However, finding and onboarding qualified labor and being able to pass on raw material price increases will ultimately define manufacturing revenues and profitability.”

The monthly PMI has indicated economic expansion for manufacturing for 32 consecutive months. However, the PMI for April slipped to 52.8 percent, meaning that economic growth was slowing.

Uncertainty in Manufacturing

The forecast results were issued amidst major uncertainties.

The U.S. and China have been negotiating to resolve disagreements that led to a trade war. In the past week, President Donald Trump has expressed dissatisfaction with the pace of talks and threatened to boost tariffs. Tariffs are a tax that boosts the prices paid by customers of imported goods. They are not direct payments from one country to another.

Other highlights of the forecast include:

–Manufacturers in the survey forecast employment will increase by 2 percent by the end of 2019.

–More than three-quarters (76 percent) of respondents said they had experienced difficulty in hiring qualified employees.

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