Episode 339: The ISM Semi-Annual Economic Forecast For Spring 2019

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Today’s Episode – LIVE at 12 Noon ET

Anthony Nieves, Chair, ISM® Business Survey Committee and Timothy Fiore, Chair of the ISM Manufacturing Business Survey Committee join hosts Lew and Tim LIVE  for an inside look at the Spring 2019 Semi-annual Economic Forecast. Don’t miss this very important look at this vital forecast today, May 8th at 12 Noon ET.

The full report can be viewed at the bottom of this page.

Semi-Annual Economic Forecast for Spring 2019

Manufacturing Growth Continues in 2019
Revenue to Increase 4%
Capital Expenditures to Increase 5.9%
Capacity Utilization Currently at 84.2%

Non-Manufacturing Growth Continues in 2019
Revenue to Increase 3.1%
Capital Expenditures to Increase 2.1%
Capacity Utilization Currently at 89%

 

(Tempe, AZ) — Economic growth is expected to continue in the U.S. throughout 2019, say the nation’s purchasing and supply executives in their Spring 2019 Semiannual Economic Forecast. Expectations for the remainder of 2019 continue to be positive in both the manufacturing and non-manufacturing sectors.

These projections are part of the forecast issued by the Institute for Supply Management® (ISM®) Business Survey Committees. The forecast was presented today 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 Non-Manufacturing Business Survey Committee.

Manufacturing Summary

Fifty-five percent of respondents from the panel of manufacturing supply management executives predict their revenues, on average, will be 4 percent greater in 2019 compared to 2018, 11 percent expect an 11.1 percent decline, and 34 percent foresee no change in revenue. This yields an overall average forecast of 4 percent revenue growth among manufacturers for 2019. This current prediction is 1.7 percentage points below the December 2018 forecast of 5.7-percent revenue growth for 2019 and is 1.8 percentage points below the actual revenue growth reported for all of 2018. With operating rate at 84.2 percent, an expected capital expenditure increase of 5.9 percent, an increase of 1.5 percent for prices paid for raw materials, and employment expected to increase by 2 percent by the end of 2019, manufacturing is positioned to grow revenues while managing costs through the remainder of the year. “With 17 of the 18 manufacturing sector industries predicting revenue growth in 2019, U.S. manufacturing continues to move in a positive direction. However, finding and onboarding qualified labor and being able to pass on raw material price increases will ultimately define manufacturing revenues and profitability,” says Fiore.

The 17 industries reporting expectations of growth in revenue for 2019 — listed in order — are: Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Nonmetallic Mineral Products; Textile Mills; Miscellaneous Manufacturing; Furniture & Related Products; Petroleum & Coal Products; Primary Metals; Food, Beverage & Tobacco Products; Wood Products; Chemical Products; Transportation Equipment; Machinery; Fabricated Metal Products; Plastics & Rubber Products; and Paper Products.

 

The manufacturing panel was also asked Special Questions related to the impact thus far in 2019 on the following: (1) In the past six months, has your firm had difficulty hiring workers to fill open positions? (2) In the past six months, has your firm raised wages to recruit new hires? (3) In the past six months, has your firm offered additional training for new hires? (4) In the past 6 months, has your firm increased, decreased or left unchanged its capital spending plans for the next 12 months, and why did you say so? (5) Do you believe that tariffs have raised the price of the goods that you produce and deliver to your customers? (6) If you believe that tariffs have raised the price of your goods to your customers, by how much? (7) Do you believe that tariffs have caused delays and disruptions in your supply chain.

Non-Manufacturing Summary

Forty-seven percent of non-manufacturing purchasing and supply executives expect their 2019 revenues to be greater by 9.2 percent as compared to 2018. Respondents currently expect a 3.1 percent net increase in overall revenue, which is less than the 3.7 percent increase that was forecasted in December 2018. “Non-manufacturing will continue to grow for the balance of 2019. Non-manufacturing companies continue to operate with extreme efficiency, which is echoed by the high percentage of capacity utilization. Supply managers have indicated that prices are projected to increase 1.5 percent over the year reflecting minimal inflation. Employment is projected to grow 1.3 percent. Seventeen out of 18 industries are forecasting increased revenues, which is more than the 16 industries that forecasted increased revenues last year. The non-manufacturing sector will continue economic growth throughout the year,” says Nieves.

The 17 non-manufacturing industries expecting increases in revenue in 2019 — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Construction; Management of Companies & Support Services; Arts, Entertainment & Recreation; Information; Other Services; Mining; Professional, Scientific & Technical Services; Accommodation & Food Services; Finance & Insurance; Wholesale Trade; Health Care & Social Assistance; Transportation & Warehousing; Public Administration; Real Estate, Rental & Leasing; Utilities; and Educational Services.

 

The non-manufacturing panel was also asked Special Questions related to the impact thus far in 2019 on the following: (1) In the past six months, has your firm had difficulty hiring workers to fill open positions? (2) In the past six months, has your firm raised wages to recruit new hires? (3) In the past six months, has your firm offered additional training for new hires? (4) In the past six months, has your firm increased, decreased or left unchanged its capital spending plans for the next 12 months? And why did you say so? (5) Do you believe that tariffs will raise the price of the goods that you produce and deliver to your customers? (6) If you believe that tariffs will raise the price of your goods to your customers, by how much? (7) Do you believe that tariffs will cause delays and disruptions in your supply chain? Their responses are provided at the end of this report.

 


OPERATING RATE

Manufacturing

Purchasing and supply managers report that their companies are currently operating, on average, at 84.2 percent of normal capacity, 1 percentage point less than was reported in December 2018. The eight industries reporting operating capacity levels at or above the average capacity of 84.2 percent — listed in order — are: Paper Products; Petroleum & Coal Products; Furniture & Related Products; Electrical Equipment, Appliances & Components; Nonmetallic Mineral Products; Apparel, Leather & Allied Products; Wood Products; and Food, Beverage & Tobacco Products.

Non-Manufacturing

Non-manufacturing purchasing and supply executives report that their organizations are currently operating at 89 percent of normal capacity. This is 0.6 percent more than what was reported in December 2018 and more than the 85.5 percent reported in May 2018. The 12 industries operating at capacity levels above the average rate of 89 percent — listed in order — are: Educational Services; Real Estate, Rental & Leasing; Arts, Entertainment & Recreation; Public Administration; Mining; Professional, Scientific & Technical Services; Retail Trade; Construction; Accommodation & Food Services; Transportation & Warehousing; Finance & Insurance; and Other Services.

Operating Rate
Manufacturing Non-Manufacturing
May
2018
Dec
2018
May
2019
May
2018
Dec
2018
May
2019
90%+ 47% 57% 43% 52% 65% 62%
50%-89% 51% 43% 56% 45% 33% 37%
Below 50% 2% 0% 1% 3% 2% 1%
Est. Overall Average 85.8% 85.2% 84.2% 85.5% 88.4% 89.0%

 


PRODUCTION CAPACITY

Manufacturing

Production capacity in manufacturing is expected to increase 4.5 percent in 2019. This increase is less than the 4.7-percent increase predicted in December 2018 and is greater than the 4-percent increase reported in December 2018 for all of 2018. This reflects the continuing strength in the sector, as 37 percent of respondents expect an average capacity increase of 13.8 percent, 6 percent expect decreases averaging 9.9 percent, and 57 percent expect no change. The 15 industries expecting production capacity increases for 2019 — listed in order — are: Computer & Electronic Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Furniture & Related Products; Electrical Equipment, Appliances & Components; Chemical Products; Nonmetallic Mineral Products; Textile Mills; Primary Metals; Machinery; Transportation Equipment; Fabricated Metal Products; Plastics & Rubber Products; Paper Products; and Petroleum & Coal Products.

Manufacturing Production Capacity
For 2018 For 2019 For 2019
Reported
Dec 2018
Magnitude
of Change
Predicted
Dec 2018
Magnitude
of Change
Predicted
May 2019
Magnitude
of Change
Higher 44% +9.9% 49% +10.2% 37% +13.8%
Same 51% NA 49% NA 57% NA
Lower 5% -7.2% 2% -11.3% 6% -9.9%
Net Average +4.0% +4.7% +4.5%

 

Non-Manufacturing

The capacity to produce products or provide services in the non-manufacturing sector is expected to increase 2 percent during 2019. This compares to an increase of 2.4 percent reported for 2018, and a prediction in December 2018 for an increase of 2.9 percent for 2019. Twenty-two percent of non-manufacturing respondents expect their capacity for 2019 to increase by an average of 10.7 percent, and 3 percent of the respondents foresee their capacity decreasing by an average of 13.8 percent. Seventy-five percent expect no change in their capacity. The 14 industries expecting to add to their production capacity in 2019 — listed in order — are: Construction; Agriculture, Forestry, Fishing & Hunting; Management of Companies & Support Services; Professional, Scientific & Technical Services; Accommodation & Food Services; Mining; Retail Trade; Wholesale Trade; Utilities; Finance & Insurance; Health Care & Social Assistance; Public Administration; Information; and Other Services.

Non-Manufacturing Production or Provision Capacity
For 2018 For 2019 For 2019
Reported
Dec 2018
Magnitude
of Change
Predicted
Dec 2018
Magnitude
of Change
Predicted
May 2019
Magnitude
of Change
Higher 31% +9.1% 36% +8.1% 22% +10.7%
Same 65% NA 63% NA 75% NA
Lower 4% -12.1% 1% -4.5% 3% -13.8%
Net Average +2.4% +2.9% +2.0

 


PREDICTED CAPITAL EXPENDITURES — 2019 vs. 2018

Manufacturing

Survey respondents expect a 5.9-percent increase in capital expenditures in 2019. This is nearly even with the 6-percent increase predicted by the panel in the December 2018 forecast for 2019. Currently, 32 percent of respondents predict increased capital expenditures in 2018, with an average increase of 29.3 percent, and 12 percent said their capital spending would decrease an average of 27.7 percent. Fifty-five percent say they will spend the same in 2019 as they did in 2018. The 14 industries expecting increases in capital expenditures in 2019 compared to 2018 — listed in order — are: Furniture & Related Products; Textile Mills; Printing & Related Support Activities; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Transportation Equipment; Chemical Products; Miscellaneous Manufacturing; Computer & Electronic Products; Paper Products; Apparel, Leather & Allied Products; Fabricated Metal Products; and Machinery.

Non-Manufacturing

Non-manufacturing purchasing and supply executives expect to increase their level of capital expenditures 2.1 percent in 2019 compared to 2018. The 26 percent of members expecting to spend more, predict an average increase of 20.8 percent. Fourteen percent of respondents anticipate an average decrease of 22.6 percent. Sixty percent of the respondents expect to spend the same on capital expenditures in 2019 as in 2018. The 10 industries expecting an increase in capital expenditures in 2019 from 2018 — listed in order — are: Construction; Agriculture, Forestry, Fishing & Hunting; Public Administration; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Accommodation & Food Services; Mining; Health Care & Social Assistance; Finance & Insurance; and Management of Companies & Support Services.

Predicted Capital Expenditures 2019 vs. 2018
Manufacturing Non-Manufacturing
Predicted
Dec 2018
Predicted
May 2019
Magnitude
of Change
Predicted
Dec 2018
Predicted
May 2019
Magnitude
of Change
Higher 41% 32% +29.3% 43% 26% +20.8%
Same 40% 55% NA 42% 60% NA
Lower 19% 12% -27.7% 15% 14% -22.6%
Net Average +6.0% +5.9% +3.4% +2.1%

 


PRICES — Changes Between End of 2018 and May 2019

Manufacturing

In the December 2018 forecast, respondents predicted an increase of 3.5 percent in prices paid during the first four months of 2019; they now report prices increased by 1.5 percent. The 45 percent who say their prices are higher now than at the end of 2018 report an average increase of 4.9 percent, while the 13 percent who report lower prices report an average decrease of 5 percent. The remaining 42 percent indicate no change for the period. Sixteen manufacturing industries reported an increase in prices paid for the first part of 2019 in the following order: Textile Mills; Apparel, Leather & Allied Products; Furniture & Related Products; Miscellaneous Manufacturing; Transportation Equipment; Machinery; Printing & Related Support Activities; Computer & Electronic Products; Petroleum & Coal Products; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Nonmetallic Mineral Products; Chemical Products; Plastics & Rubber Products; and Paper Products.

 

Non-Manufacturing

Non-Manufacturing respondents report that their purchases in the first four months of this year cost an average of 1 percent more than at the end of 2018. This is 2.2 percentage points lower than the 3.2-percent increase predicted in December 2018 for the first four months of 2019. Thirty-eight percent of non-manufacturing respondents report that prices increased an average of 3.8 percent in the first part of 2019. Eight percent report price decreases averaging 6.3 percent. The remaining 54 percent indicate no change in prices paid in the first four months of 2019. The 15 industries reporting an increase in prices paid in the first part of 2019 — listed in order — are: Arts, Entertainment & Recreation; Utilities; Transportation & Warehousing; Construction; Public Administration; Accommodation & Food Services; Professional, Scientific & Technical Services; Wholesale Trade; Mining; Health Care & Social Assistance; Information; Educational Services; Real Estate, Rental & Leasing; Management of Companies & Support Services; and Other Services.

Prices — Changes Between End of 2018 and May 2019
Manufacturing Non-Manufacturing
Predicted
Dec 2018
Reported
May 2019
Magnitude
of Change
Predicted
Dec 2018
Reported
May 2019
Magnitude
of Change
Higher 71% 45% +4.9% 66% 38% +3.8%
Same 17% 42% NA 29% 54% NA
Lower 12% 13% -5.0% 5% 8% -6.3%
Net Average +3.5% +1.5% +3.2% +1.0%

 


PRICES — Predicted Changes Between End of 2018 and End of 2019

Manufacturing

When asked to predict 2019 price changes, 44 percent of respondents expect prices to increase by 4.8 percent for the full year of 2019 compared to the end of 2018. Meanwhile, 17 percent anticipate decreases averaging 4 percent. Including the 39 percent who expect no change in prices, survey respondents expect a net average prices increase of 1.5 percent for all of 2019. Seventeen of 18 manufacturing industries are predicting price increases for all of 2019 in the following order: Apparel, Leather & Allied Products; Furniture & Related Products; Textile Mills; Miscellaneous Manufacturing; Petroleum & Coal Products; Computer & Electronic Products; Transportation Equipment; Primary Metals; Wood Products; Nonmetallic Mineral Products; Machinery; Food, Beverage & Tobacco Products; Printing & Related Support Activities; Chemical Products; Fabricated Metal Products; Paper Products; and Plastics & Rubber Products.

Non-Manufacturing

For 2019, non-manufacturing respondents expect prices to increase, on average, 1.5 percent when compared to the prices at the end of 2018. Given that respondents have reported that prices have increased 1 percent through May 2019, prices are projected to increase 0.5 percentage point over the remainder of the year. Forty-seven percent of respondents anticipate price increases averaging 4.6 percent. Twelve percent of respondents expect price decreases of 5.7 percent, and 41 percent do not expect prices to change. The 14 industries expecting price increases in 2019 — listed in order — are: Arts, Entertainment & Recreation; Transportation & Warehousing; Other Services; Public Administration; Mining; Construction; Management of Companies & Support Services; Real Estate, Rental & Leasing; Wholesale Trade; Utilities; Information; Professional, Scientific & Technical Services; Accommodation & Food Services; and Educational Services.

Prices — Predicted Changes Between End of 2018 and End of 2019
Manufacturing Non-Manufacturing
Predicted
Dec 2018
Predicted
May 2019
Magnitude
of Change
Predicted
Dec 2018
Predicted
May 2019
Magnitude
of Change
Higher 67% 44% +4.8% 69% 47% +4.6%
Same 22% 39% NA 24% 41% NA
Lower 11% 17% -4.0% 7% 12% -5.7%
Net Average +3.3% +1.5% +3.6% +1.5%

EMPLOYMENT

Employment – Predicted Changes Between End of 2018 and End of 2019

Manufacturing

ISM’s Manufacturing Business Survey respondents forecast that manufacturing employment will increase by 2 percent by the end of 2019, compared to the end of 2018. Thirty-six percent of respondents expect employment to be 6.7 percent higher, on average, while 8 percent of respondents predict employment to be lower by 5.2 percent. The remaining 56 percent of respondents expect their employment levels to be unchanged for the remainder of 2019. The 14 industries reporting expectations of growth in employment during 2019 — listed in order — are: Computer & Electronic Products; Textile Mills; Fabricated Metal Products; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Furniture & Related Products; Food, Beverage & Tobacco Products; Plastics & Rubber Products; Machinery; Petroleum & Coal Products; Printing & Related Support Activities; Transportation Equipment; Chemical Products; and Paper Products.

Non-Manufacturing

ISM’s Non-Manufacturing Business Survey Committee respondents forecast that employment will increase 1.3 percent through the end of 2019. For the remaining months of 2019, 33 percent expect employment to increase, on average, 6.1 percent, 10 percent anticipate employment to decrease by 7.7 percent, and 57 percent expect their employment levels to be unchanged. The 13 industries anticipating increases in employment — listed in order — are: Construction; Arts, Entertainment & Recreation; Other Services; Professional, Scientific & Technical Services; Accommodation & Food Services; Wholesale Trade; Management of Companies & Support Services; Agriculture, Forestry, Fishing & Hunting; Finance & Insurance; Health Care & Social Assistance; Public Administration; Transportation & Warehousing; and Real Estate, Rental & Leasing.

Employment — Predicted Changes Between End of 2018 and End of 2019*
Manufacturing Non-Manufacturing
Predicted
for 2019
Dec 2018
Predicted
May 2019
Magnitude
of Change
Predicted
for 2019
Dec 2018
Predicted
May 2019
Magnitude
of Change
Higher 44% 36% +6.7% 49% 33% +6.1%
Same 48% 56% NA 40% 57% NA
Lower 8% 8% -5.2% 11% 10% -7.7%
Net Average +2.4% +2.0% +2.0% +1.3%

*Change made to questionnaire in 2017. Respondents are asked now for a year-over-year employment comparison rather than a partial-year update, as previously reported.

 


BUSINESS REVENUES

Business Revenues Comparison — 2019 vs. 2018

Manufacturing

Increased revenue is expected in 2019 as purchasing and supply management executives predict an overall net increase of 4 percent in sector business revenue for 2019 over 2018. This is 1.7 percentage points lower than the 5.7-percent increase forecast in December 2018 for all of 2019, and 1.8 percentage points lower than the 5.8-percent increase reported for 2018 over 2017. Fifty-five percent of respondents say that revenues for 2019 will increase 9.5 percent, on average, over 2018. Conversely, 11 percent say their revenues will decrease, on average, 11.1 percent, and the remaining 34 percent indicate no change. Of the 18 manufacturing industries, 17 are reporting expectations of growth in revenue during 2019 in the following order: Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Nonmetallic Mineral Products; Textile Mills; Miscellaneous Manufacturing; Furniture & Related Products; Petroleum & Coal Products; Primary Metals; Food, Beverage & Tobacco Products; Wood Products; Chemical Products; Transportation Equipment; Machinery; Fabricated Metal Products; Plastics & Rubber Products; and Paper Products.

Manufacturing Business Revenue
2018 vs. 2017 2019 vs. 2018
Reported
Dec 2018
% Change Predicted
Dec 2018
% Change Predicted
May 2019
% Change
Higher 65% +10.2% 64% +10.2% 55% +9.5%
Same 26% NA 25% NA 34% NA
Lower 9% -8.6% 11% -7.6% 11% -11.1%
Net Average +5.8% +5.7% +4.0%

 

Non-Manufacturing

Non-manufacturing respondents forecast that sector business revenue for 2019 will increase 3.1 percent compared to 2018. This is 0.6 percent less than the 3.7 percent that was predicted in December 2018 for 2019. The 47 percent of respondents forecasting better business in 2019 than in 2018 estimate an average revenue increase of 9.2 percent. The 11 percent who predict less business in 2019 forecast an average decrease of 11.4 percent. The remaining 42 percent see no change in revenues for 2019. The 17 industries expecting an increase in revenues in 2019 — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Construction; Management of Companies & Support Services; Arts, Entertainment & Recreation; Information; Other Services; Mining; Professional, Scientific & Technical Services; Accommodation & Food Services; Finance & Insurance; Wholesale Trade; Health Care & Social Assistance; Transportation & Warehousing; Public Administration; Real Estate, Rental & Leasing; Utilities; and; Educational Services.

Non-Manufacturing Business Revenue
2018 vs. 2017 2019 vs. 2018
Reported
Dec 2018
% Change Predicted
Dec 2018
% Change Predicted
May 2019
% Change
Higher 58% +8.8% 57% +7.4% 47% +9.2%
Same 32% NA 35% NA 42% NA
Lower 10% -6.3% 8% -5.7% 11% -11.4%
Net Average +4.5% +3.7% +3.1%

 


SPECIAL QUESTIONS RELATED TO THE EARLY MONTHS OF 2019

We asked the panelists to tell us: (1) In the past six months, has your firm had difficulty hiring workers to fill open positions? (2) In the past six months, has your firm raised wages to recruit new hires? (3) In the past six months, has your firm offered additional training for new hires? (4) In the past six months, has your firm increased, decreased, or left unchanged its capital spending plans for the next 12 months? And why did you say so?

 

We also asked three questions related to tariffs. (1) Do you believe that tariffs have raised the price of the goods that you produce and deliver to your customers? (2) If you believe that tariffs have raised the price of your goods to your customers, by how much? (3) Do you believe that tariffs caused delays and disruptions in your supply chain?

 

Manufacturing

Answers to the first Special Question, “In the past six months, has your firm had difficulty hiring workers to fill open positions?”:

  • Yes, we have had difficulty hiring (76.0%)
  • No, we have not had difficulty hiring (24.0%)

Answers to the second Special Question, “In the past six months, has your firm raised wages to recruit new hires?”:

  • Yes (53.7%)
  • No (46.3%)

Answers to the third Special Question: “In the past six months, has your firm offered additional training for new hires?”:

  • Yes (44.4%)
  • No (55.6%)

Answers to the fourth Special Question: “In the past six months, has your firm increased, decreased or left unchanged its capital spending plans for the next 12 months? And why did you say so?”:

  • Increased capital spending plans (34.7%)
  • Decreased capital spending plans (17.9%)
  • No change to capital spending plans (47.4%)

As a follow-up to the fourth Special Question, respondents were asked why they answered as they did.

  • The reasons given by those who increased capital spending plans (34.7%):
    • General business outlook (69.3%)
    • Business tax reform (4.5%)
    • Prospects for regulatory reform (3.0%)
    • Other (23.2%)

 

  • The reasons given by those who decreased capital spending plans (17.9%):
    • General business outlook (66.1%)
    • Prospects for regulatory reform (0%)
    • Business tax reform(0.0%)
    • Other (33.9%)

Answers to the fifth Special Question: “Do you believe that tariffs have raised the price of the goods that you produce and deliver to your customers?”:

  • Yes (59.1%)
  • No (40.9%)

In response to the sixth Special Question: “If you believe that tariffs have raised the price of your goods to your customers, by how much?”, the average increase was 6.8 percent, with a median of 5.0 percent.

 

Answers to the seventh Special Question: “Do you believe that tariffs have caused delays and disruptions in your supply chain?”:

  • Yes (29.8%)
  • No (70.2%)

Non-Manufacturing

Answers to the first Special Question,: “In the past six months, has your firm had difficulty hiring workers to fill open positions?”:

  • Yes, we have had difficulty hiring (70.2%)
  • No, we have not had difficulty hiring (29.8%)

Answers to the second Special Question, “In the past six months, has your firm raised wages to recruit new hires?”:

  • Yes (48.1%)
  • No (51.9%)

Answers to the third Special Question, “In the past six months, has your firm offered additional training for new hires?”:

  • Yes (45.5%)
  • No (54.5%)

Answers to the fourth Special Question, “In the past six months, has your firm increased, decreased or left unchanged its capital spending plans for the next 12 months? And why did you say so?”:

  • Increased capital spending plans (27.1%)
  • Decreased capital spending plans (18.8%)
  • No change to capital spending plans (54.1%)

As a follow-up to the fourth Special Question, respondents were asked why they answered as they did:

      • The reasons given by those who increased capital spending plans (27.1%):
        • General business outlook (70.4%)
        • Business tax reform (2%)
        • Prospects for regulatory reform (3.3%)
        • Other (24.3%)
      • The reasons given by those who decreased capital spending plans (18.8%):
        • General business outlook (64.2%)
        • Prospects for regulatory reform (5.7%)
        • Business tax reform (0%)
        • Other (30.2%)

 

Answers to the fifth Special Question: “Do you believe that tariffs raised the price of the goods that you produce and deliver to your customers?”:

      • Yes (35.7%)
      • No (64.3%)

In response to the sixth Special Question, “If you believe that tariffs raised the price of your goods to your customers, by how much?”, the percent given was 7.7% with a median of 5%.

Answers to the seventh Special Question, “Do you believe that tariffs caused delays and disruptions in your supply chain?”:

      • Yes (26.6%)
      • No (73.4%)

 


SUMMARY

Manufacturing

        • Operating rate is currently at 84.2 percent of normal capacity.
        • Production capacity is expected to increase 4.5 percent in 2019.
        • Capital expenditures are expected to increase 5.9 percent in 2019.
        • Prices paid increased 1.5 percent through the end of April 2019.
        • Prices of raw materials are expected to increase a total of 1.4 percent for all of 2019, indicating an expected decrease of 0.1 percent in prices for the remainder of the year
        • Manufacturing employment is expected to increase by 2 percent in 2019.
        • Manufacturing revenue is expected to increase 4 percent in 2019.
        • Overall, manufacturing is expected to grow in 2019.

Non-Manufacturing

        • Operating rate is currently 89 percent of normal capacity.
        • Production capacity is expected to increase 2 percent in 2019.
        • Capital expenditures are expected to increase 2.1 percent in 2019.
        • Prices paid increased 1 percent through the end of April 2019.
        • Prices were reported to have increased 1 percent in the first four months of the year and are expected to increase 0.5 percentage point for the rest of the year, for a total projected net annual increase of 1.5 percent.
        • Non-manufacturing employment is expected to increase 1.3 percent during the rest of 2019.
        • Non-manufacturing revenue is expected to increase 3.1 percent in 2019.
        • The non-manufacturing sector is projected to continue growth in 2019.

*Miscellaneous Manufacturing items include products such as Medical Equipment & Supplies, Jewelry, Sporting Goods, Toys & Office Supplies.

**Other Services include: Equipment & Machinery Repairing; Promoting or Administering Religious Activities; Grant making; Advocacy; and Providing Dry-Cleaning & Laundry Services, Personal Care Services, Death Care Services, Pet Care Services, Photofinishing Services, Temporary Parking Services, and Dating Services.

In addition to the forecast, the Manufacturing ISM® Report On Business® is issued monthly on the first business day of each month and is considered by many economists to be the most reliable near-term economic barometer available. It is reviewed regularly by top government agencies and economic business leaders. The report, compiled from responses to questions asked of approximately 350 purchasing and supply executives across the country, tracks industrial production, new orders, inventories, supplier deliveries, employment, buying policies and prices. Manufacturing Business Survey Committee responses are divided into the following NAICS code categories: Food, Beverage & Tobacco Products; Textile Mills; Apparel, Leather & Allied Products; Wood Products; Paper Products; Printing & Related Support Activities; Petroleum & Coal Products; Chemical Products; Plastics & Rubber Products; Nonmetallic Mineral Products; Primary Metals; Fabricated Metal Products; Machinery; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Furniture & Related Products; and Miscellaneous Manufacturing*.

Covering the non-manufacturing sector, ISM® debuted the Non-Manufacturing ISM® Report On Business® in June 1998. The Non-Manufacturing ISM® Report On Business® is released on the third business day of each month, and is based on data received from purchasing and supply executives from 18 different non-manufacturing industries across the country. The Non-Manufacturing ISM® Report On Business® is diversified by NAICS, based on each industry’s contribution to gross domestic product (GDP). The Non-Manufacturing Business Survey Committee responses are divided into the following NAICS code categories: Agriculture, Forestry, Fishing & Hunting; Mining; Utilities; Construction; Wholesale Trade; Retail Trade; Transportation & Warehousing; Information; Finance & Insurance; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Management of Companies & Support Services; Educational Services; Health Care & Social Assistance; Arts, Entertainment & Recreation; Accommodation & Food Services; Other Services**; and Public Administration. The report covers business activity, new orders, backlog of orders, new export orders, inventory change, inventory sentiment, imports, prices, employment, and supplier deliveries.