Create a free account to continue

Manufacturing Growth ‘Marginal’ For 2008

Survey shows manufacturers are expecting revenues to edge up 1 percent, with cost cutting measures necessary to offset the lower revenue growth and high input prices.

TEMPE, Ariz. -- According to an Institute for Supply Management (ISM) study, economic growth in the United States is sustainable throughout the remainder of 2008. Expectations for the remainder of 2008 are encouraging in the manufacturing sector.

Although 42 percent of survey respondents predict revenues to be 9.2 percent greater in 2008 than 2007, the overall expected revenue increase is only 1 percent, as 31 percent expect a 9.3 percent decline, and 27 percent expect no change.

Cost cutting will be necessary to offset lower revenue growth and higher input prices.

“On average, respondents are concerned about their organizations’ prospects for 2008,” said Norbert J. Ore, chair of the ISM Manufacturing Business Survey Committee.

Purchasing and supply managers indicate that their companies are currently operating at 78.6 percent of normal capacity, a decline from the 82.9 percent reported in December 2007.

Production capacity is expected to rise 2.5 percent in 2008, significantly less than the 11.3 percent predicted in December 2007.

Capital expenditures should edge up 1 percent, slightly higher than the 0.7 percent predicted in December 2007.

In December 2007, survey respondents expected to see a 3.3 percent increase in prices paid for the first four months of 2008; however, they are now reporting prices have increased 6 percent over that period. When asked to predict 2008 price changes, 85 percent said they expect prices they pay to rise by 10.3 percent.

Manufacturing employment should increase 2.9 percent in 2008. Nineteen percent of respondents expect employment to be 25 percent higher, while 25 percent predict employment to be 7.1 percent lower. Fifty-six percent expect their employment levels to be unchanged in 2008.

For more information, click here.

More in Supply Chain