Manufacturing economic growth will extend into next year following a strong 2017, the Institute for Supply Management (Tempe, AZ) said today.
Revenue for manufacturers will rise a projected 5.1% in 2018, after a 4.1% gain this year, the group said in a semi-annual forecast. ISM also expects production capacity to increase 2.7% next year following a 4.3% 2017 increase. The group also forecast capital expenditures to rise 2.7% following an 8.7% surge this year.
“I think it’s steady expansion as she goes,” Timothy R. Fiore, chair of ISM’s Manufacturing Business Survey Committee, said on a conference call about the forecast. “At least for first half (of 2018) we’re on a pretty good trajectory.”
ISM produces a monthly manufacturing index, known as the PMI. The index has indicated manufacturing expansion for 15 straight months.
The PMI is based on a survey of 350 purchasing and supply executives in 18 industries. The institute surveys the same executives every six months in compiling its forecast.
The expected gains in manufacturing come after a strong year in 2017. Some categories performed better than had been expected. A year ago, ISM forecast that capital expenditures would rise only 0.2% in 2017. The institute estimates factories are running at 85.8% of capacity, up from 81.9% in December 2016.
‘Really, Really High’
“Operating at almost 86% from a manufacturing standpoint is really, really high,” Fiore said.
ISM said 70% of respondents expect revenue increases for 2018. They were spread across 16 industries, including fabricated metal products, machinery, miscellaneous manufacturing, transportation equipment, primary metals and petroleum and coal products.
The group also asked additional labor questions of respondents. ISM said 64.7% said they had difficulty in hiring employees for open positions. Also, according to the group, 44.4% said of respondents had raised wages to recruit employees and 44.4% also said they conducted additional training for new workers.