The good news is that the majority of supply management executives in the U.S. manufacturing industry expect their business will grow by as much as 9.1% in 2014. The not-so-good news? Electronics is falling at the low end of the expectation roster.
Sixty-eight percent of respondents to the Institute of Supply Management’s semi-annual survey of purchasing and supply managers predict their revenue will be 9.1% greater in 2014 compared to 2013; 9% expect a 9.6% decline; and 23% foresee no change. Of the 18 industries predicting growth, computer and electronics products are 12th on the list. Textile manufacturers expect the most growth during 2014.
“With all 18 industries within the manufacturing sector predicting growth in 2014, when compared to 2013, U.S. manufacturing continues to demonstrate its broad-based strength, efficiency and leadership in the world economy,” said Bradley J. Holcomb, chair of the ISM Manufacturing Business Survey Committee.
The average expectation of revenue growth, said the ISM, is 5.3%, which is a notable increase of 0.9% from December 2013 when the panel predicted a 4.4% increase in 2014 revenues. With operating capacity at 82.3%, the association reports, an expected capital expenditure increase of 10.3%, prices paid expected to increase a modest 0.2% from now through the end of 2014, and employment expected to grow 1.5% for the balance of 2014, manufacturers are positioned to grow revenues while containing costs through the remainder of the year.
The ISM survey provided additional data to compare with 2013 numbers:
- Capacity: Purchasing and supply managers’ report that their companies are currently operating at 82.3% of normal capacity, representing an increase from the 80.3% reported in December 2013, as well as an increase from the 80.2% reported in April 2013.
- Pricing: In the December 2013 forecast, respondents predicted an increase of 1.2% in prices paid during the first four months of 2014; and they now report prices have increased 1.3% for the period. The 43% who say their prices are higher now than at the end of 2013 report an average increase of 4.4%, while the 17% who report lower prices report an average decrease of 3.8%. The remaining 40% indicate no change for the period.
- Employment: ISM’s Manufacturing Business Survey respondents forecast that manufacturing employment will increase 1.5% during the balance of 2014, with 38% expecting employment to be 6.6% higher. Fifteen percent of respondents predict employment to be lower by 6.6%. The remaining 47% of respondents expect their employment levels to be unchanged for the remainder of 2014.
- Winter 2013/2014: ISM asked the manufacturing panel to comment on the potential impact the harsh winter weather had on new orders, production and employment. When asked about new orders, 51.3% of respondents indicated no impact, 34.2% indicated that the impact was short-term, 6% indicated that the impact was long-term, and 8.5% were unsure of the extent of the impact. For production, 52.8% of respondents indicated no impact, 34.2% indicated that the impact was short-term, 7.5% indicated that the impact was long-term, and 5.5% were unsure of the extent of the impact. Finally, for employment, 78.5% of respondents indicated no impact, 12.5% indicated that the impact was short-term, 3% indicated that the impact was long-term, and 6% were unsure of the extent of the impact.