Economic improvement in the United States will continue in 2021, say the nation’s purchasing and supply management executives in the December 2020 Semi-annual Economic Forecast. This expansion will continue a growth trend that began in June 2020.
Revenues are expected to increase in 15 of 18 manufacturing industries and 12 of 18 services-sector industries. Capital expenditures are expected to increase by 2.4 percent in the manufacturing sector (after a 2.4 percent decline in 2020) and increase by 12.7 percent in the services sector. The manufacturing employment base is expected to grow by 2.5 percent following a decline of 2.8 percent in 2019. Growth in the second half (H2) of the year is projected to be stronger than in H1. These projections are part of the forecast issued by the Business Survey Committee of Institute for Supply Management (ISM). The forecast was released last week by Timothy R. Fiore, CPSM, C.P.M, Chair of the ISM Manufacturing Business Survey Committee, and by Anthony S. Nieves, CPSM, C.P.M., A.P.P, CFPM, Chair of the ISM Services Business Survey Committee. Expectations for 2021 are positive, as 59 percent of survey respondents expect revenues to be greater in 2021 than in 2020. The panel of purchasing and supply executives expects a 6.9 percent net increase in overall revenues for 2021, compared to a 1.3 percent decrease reported for 2020. Fifteen of the 18 manufacturing industries expect revenue improvement in 2021, listed in order: Printing & Related Support Activities; Transportation Equipment; Nonmetallic Mineral Products; Apparel, Leather & Allied Products; Machinery; Computer & Electronic Products; Primary Metals; Plastics & Rubber Products; Fabricated Metal Products; Miscellaneous Manufacturing; Chemical Products; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Furniture Products; and Paper Products.
“Manufacturing’s purchasing and supply executives expect to see strong growth in 2021. They are optimistic about overall business prospects for the first half of 2021, with business continuing to expand through the second half and at higher rates. Manufacturing experienced seven consecutive months of growth from June through December 2020, with December’s PMI at its highest level since August 2018, the peak of the last manufacturing expansion. Respondents expect an increase in raw materials pricing pressures in 2021, as well as improved profit margins. Wages and employment will also return to growth. Manufacturers also predict growth in both exports and imports in 2021,” said Fiore.
In the manufacturing sector, respondents report operating at 85.7 percent of their normal capacity, up 9.8 percentage points from the 75.9 percent reported in May 2020. Purchasing and supply executives predict that capital expenditures will increase by 2.4 percent in 2021 over 2020, compared to the 2.4 percent decrease reported for 2020 over 2019. Manufacturers expect employment in the sector to grow by 2.5 percent in 2021 relative to December 2020levels, while labor and benefit costs are expected to increase an average of 2.7 percent. Respondents also expect the U.S. dollar to weaken against six of the seven currencies of major trading partners in 2021; it is expected to strengthen relative to the Mexican peso.
