Economic Recovery Continues in 2010: Institute for Supply Management

“Manufacturing purchasing and supply executives reflect more of their typical optimism about their organizations’ prospects as they consider the first half of 2010,and they are even more positive about the second half,” said Ore. “While 2009 has been a challenging year overall, we are in a growth trend as we approach the end of the year. Respondents expect cost pressures to be low to moderate based on their price forecast. Manufacturing growth is now in its fourth consecutive month as measured by and reported in the monthly Manufacturing ISM Report On Business®.”

In the manufacturing sector, respondents report operating at 70.1 percent of their normal capacity, up from 67 percent reported in April 2009. Purchasing and supply executives predict that capital expenditures will decrease by 4 percent in 2010, compared to a 7.8 percent decrease reported for 2009. Survey respondents also forecast that they will reduce inventories in an effort to improve their purchased inventory-to-sales ratio in 2010. Manufacturers have an expectation that employment in the sector will increase by 1.5 percent, while labor and benefits costs are expected to increase an average of 1.4 percent in 2010. Manufacturing purchasers are predicting strength in exports and imports in 2010. They also expect the U.S. dollar to weaken on average against the currencies of major trading partners.

The panel also predicts the prices they pay will increase 0.2 percent during the first four months of 2010, and will increase an additional 2.4 percent during the balance of 2010, with an overall increase of 2.6 percent for 2010. Respondents’ major concerns are: weak economy; credit crisis; taxes; interest rates; and high energy costs. Survey respondents expect to realize supply chain improvements through supplier consolidation; new or improved enterprise technology and system utilization; improved inventory/asset management; lean manufacturing; and cost reduction.

Non-Manufacturing Summary