The economic downturn in the U.S. will continue for the rest of 2020, according to the spring 2020 semiannual economic forecast from the Institute for Supply Management. Expectations for the remainder for 2020 have been clouded by the coronavirus (COVID-19) pandemic, with both manufacturing and non-manufacturing sectors signaling contraction.
In the manufacturing sector, revenue for 2020 is expected to decrease, on average, by 10.3%. This is 15.1 percentage points lower than the 4.8% increase forecast in December 2019 for all of 2020, and 12.2 percentage points lower than the 1.9% increase reported for 2019 compared with 2018.
Eighteen percent of respondents said revenues for 2020 will increase 10.6%, on average, compared with 2019. Conversely, 58% said their revenues will decrease, on average, 21.2%, and the remaining 24% indicated no change. With operating rate at 75.9%, an expected capital expenditure decrease of 19.1%, an expected decrease of 1.6% for prices paid for raw materials and employment expected to decrease by 5.3% by the end of 2020, manufacturing has been negatively impacted by the coronavirus pandemic.
“With 15 of the 18 manufacturing sector industries — including five of the six big industry sectors — predicting revenue declines for 2020, panelists forecast that recovery will likely not occur until near the end of the year. The sectors’ responses were consistent with the industry-performance reports in April’s Report On Business,” Timothy R. Fiore, chair of the ISM manufacturing business survey committee, said.
The two manufacturing industries reporting expectations of growth in revenue for 2020 are apparel, leather and allied products and food, beverage and tobacco products. The 15 manufacturing industries expecting decreases in revenue in 2020 include petroleum and coal products, transportation equipment, and computer and electronic products.
In the non-manufacturing sector, respondents currently expect a 10.4% net decrease in overall revenue, which is 13.8 percentage points less than the 3.4% increase that was forecasted in December 2019. Nine percent of respondents said that revenues for 2020 will increase 13.1%, on average, compared with 2019. Meanwhile, 57% said their revenues will decrease, on average, 20.1%, and the remaining 34% indicated no change.
“Non-manufacturing will look to recover over the balance of 2020,” Anthony S. Nieves, chair of the ISM non-manufacturing business survey committee, said. “Non-manufacturing companies are currently operating at 73.3% of normal capacity. Supply managers have indicated that prices are projected to increase 3.9% over the year, reflecting moderate inflation. Employment is projected to decrease 3%. All 18 industries are forecasting decreased revenues, a dramatic reversal from 2019, when 17 of 18 industries projected increased revenues for the year.”
All 18 non-manufacturing industries expect revenue decreases in 2020, including retail trade, finance and insurance, and wholesale trade.
