Economic growth is expected to continue in the U.S. throughout the remainder of 2016, according to the results of the Spring 2016 Semiannual Economic Forecast from the Institute for Supply Management.
Expectations for the remainder of 2016 continue to be positive in both the manufacturing and non-manufacturing sectors.
These projections are part of the forecast issued by the Business Survey Committee of the ISM. The forecast was presented by Bradley J. Holcomb, CPSM, CPSD and chair of the ISM manufacturing business survey committee along with Anthony S. Nieves, CPSM, C.P.M., CFPM and chair of the ISM non-manufacturing business survey committee.
Fifty percent of respondents from the panel of manufacturing supply management executives predicted their revenues will be 10.5% greater in 2016 compared to 2015, 18% expect a 14.2% decline and 32% foresee no change in revenue. This yields an overall average forecast of 2.8% revenue growth among manufacturers for 2016. This current prediction is 1.3 percentage points below the December 2015 forecast of 4.1% revenue growth for 2016, but is 1.4% above the actual revenue growth reported for all of 2015.
With operating capacity at 81.7%, an expected capital expenditure increase of 1%, an increase of 0.6% for prices paid for raw materials and employment expected to remain the same for the balance of 2016, manufacturing is positioned to grow revenues while containing costs through the remainder of the year.
“With 14 of the 18 industries within the manufacturing sector predicting revenue growth in 2016 when compared to 2015, U.S. manufacturing continues to move in a positive direction,” said Holcomb.
Fifty-three percent of non-manufacturing purchasing and supply executives expect their 2016 revenues to be greater by 8.5% as compared to 2015. Overall, respondents currently expect a 2.4% net increase in overall revenues, which is less than the 2.7% increase that was forecast in December 2015.
“Non-manufacturing will continue to grow for the balance of 2016. Non-manufacturing companies continue to operate very efficiently as reflected by the high percentage of capacity utilization,” said Nieves. “Supply managers have indicated that overall costs have not been significant with pricing projected to increase 0.9% over the year. Overall employment is projected to grow slightly at 0.7%. Thirteen out of 18 industries are forecasting increased revenues which is less than the 15 industries that forecasted increased revenues last year. The non-manufacturing sector will continue on the path of steady economic growth throughout the year.”
The non-manufacturing panel was also asked about the impact thus far in 2016 on their organization’s profits due to the strength of the U.S. dollar, the net impact of the depressed prices of oil and related commodities and the combined impact of both of these factors.