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Manufacturers expect 5.1% growth in 2018

Growth Rate expectancy of Manufacturers surveyed in 2017

Economic growth in the United States will continue in 2018, say the nation’s purchasing and supply management executives in the December 2017 Semiannual Economic Forecast. Expectations are for a continuation of the economic recovery that began in mid-2009, as indicated in the monthly ISM Report On Business.

The manufacturing sector is optimistic about growth in 2018, with revenues expected to increase in 16 manufacturing industries, and the non-manufacturing sector indicates that 17 of its industries will see higher revenues.

Capital expenditures, a major driver in the U.S. economy, are expected to increase by 2.7 percent in the manufacturing sector and increase by 3.8 percent in the non-manufacturing sector. Manufacturing expects that its employment base will grow by 1.2 percent, while non-manufacturing expects employment growth of 1.5 percent.

Manufacturing Summary

Expectations for 2018 are positive, as 70 percent of survey respondents expect revenues to be greater in 2018 than in 2017. The panel of purchasing and supply executives expects a 5.1 percent net increase in overall revenues for 2018, compared to a 4.6 percent increase predicted for 2017 over 2016 revenues.

The 16 manufacturing industries expecting revenue improvement in 2018 over 2017 – listed in order – are: Fabricated Metal Products; Electrical Equipment, Appliances & Components; Nonmetallic Mineral Products; Machinery; Miscellaneous Manufacturing; Computer & Electronic Products; Transportation Equipment; Plastics & Rubber Products; Primary Metals; Paper Products; Textile Mills; Chemical Products; Food, Beverage & Tobacco Products; Furniture & Related Products; Printing & Related Support Activities; and Petroleum & Coal Products.

Manufacturing purchasing and supply executives expect to see growth in 2018. They are optimistic about their overall business prospects for the first half of 2018, with business continuing to expand through the second half of 2018.

In 2017, manufacturing experienced 11 straight months of growth from January through November, resulting in an average PMI of 57.4, as compared to 51.5 for 2016.

Respondents expect raw materials pricing pressures in 2018 to increase, and expect their profit margins will improve in 2018 over 2017. Manufacturers are also predicting growth in both exports and imports in 2018.

Respondents also expect the U.S. dollar to strengthen against all seven currencies of major trading partners in 2018, as was the case in 2017.

The panel predicts the prices paid for raw materials will increase by 1.3 percent during the first four months of 2018, and will increase an additional 0.5 percent during the balance of the year, with an overall increase of 1.8 percent for 2018. This compares to a reported 2.1 percent increase in raw materials prices for 2017 compared with 2016.


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