- THE MAGAZINE
Expectations for manufacturing for 2009 are pessimistic, as 65% of survey respondents expect revenues to be the same or smaller in 2009 than in 2008. The panel of purchasing and supply executives expects a 1.1% net decrease in overall revenues for 2009, compared to a 2.2% decrease reported for 2008. Manufacturing industries expecting improvement over 2008 are: Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Printing & Related Support Activities; Miscellaneous Manufacturing(a); Food, Beverage & Tobacco Products; Apparel, Leather & Allied Products; and Chemical Products. Industries expecting a decline over 2008 are: Primary Metals; Nonmetallic Mineral Products; Fabricated Metal Products; Textile Mills; Computer & Electronic Products; Machinery; Paper Products; Furniture & Related Products; Transportation Equipment; and Plastics & Rubber Products.
“Manufacturing purchasing and supply executives lack their usual optimism about their organizations’ prospects as they consider the first half of 2009; however, they are somewhat more positive about the second half,” said Norbert J. Ore, chair of the committee. “While 2008 has been a challenging year overall, we are apparently seeing a rapid halt to the inflationary cycle of the past several years as it relates to manufacturing inputs. Respondents expect cost pressures to stabilize in the second half of 2009 based on their overall price forecast. Manufacturing growth is now in its fourth consecutive month of contraction as measured by and reported in the monthly Manufacturing ISM Report On Business®.”
In the manufacturing sector, respondents report operating at 75.2% of their normal capacity, down from 78.6% reported in April 2008. Purchasing and supply executives predict that capital expenditures will decrease by 6.7% in 2009, compared to a 5.9% increase reported for 2008. Survey respondents also forecast that they will reduce inventories in an effort to decrease their purchased inventory-to-sales ratio in 2009. Manufacturers have an expectation that employment in the sector will decline by 2.7%, while labor and benefits costs are expected to increase an average of 1.9% in 2009. Manufacturing purchasers are predicting strength in exports but weakness in imports. They also expect the U.S. dollar to strengthen on average against the currencies of major trading partners.
The panel also predicts the prices they pay will decrease 2.3% during the first four months of 2009, and will decrease an additional 0.3% during the balance of 2009, with an overall decrease of 2.6% for 2009. Respondents’ major concerns are: weak economy/recession; credit crisis; consumer spending; automobile industry; and housing.
The full report is available at www.ism.ws.