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Manufacturing Forecast to Expand in 2021

Bill Koenig
By Bill Koenig Senior Editor, SME Media

Manufacturing should expand this year as the sector continues to recover from the COVID-19 pandemic, the Institute for Supply Management said today in a forecast.

“I think we’re back to a growth cycle,” Timothy R. Fiore, chair of the group’s Manufacturing Business Survey Committee, said on a conference call. “Business needs clarity, it needs certainty.”

The forecast is based on a survey of purchasing and supply executives in 18 industries by Tempe, Ariz.-based ISM. The survey was conducted in December after the U.S. presidential election. ISM also produces a monthly manufacturing index, known as the PMI.

ISM forecast that manufacturing revenue will rise 6.9 percent in 2021 compared with a 1.3 percent decrease last year.

The institute said 15 of 18 industries expect revenue to increase. Those sectors included transportation equipment, non-metallic mineral products, machinery, primary metals, and fabricated metal products.

Respondents also reported they were operating at 85.7 percent of capacity at the end of 2020. That was up from 75.9 percent in May when manufacturing had been hammered by COVID-19.

Factories in various industries closed plants starting in March to slow the spread of the virus. Plants later reopened with new safety procedures.

Vaccines have been developed although there have been problems in getting them administered. Fiore said respondents in the survey indicated optimism the bulk of the U.S. population will be vaccinated by the end of this year.

The survey also forecast that capital expenditures in manufacturing will rise 2.4 percent in 2021, compared with a decline of 2.4 percent last year. Respondents also expect that employment levels will increase by 2.5 percent compared with 2020 levels.

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