Economic Recovery Continues in 2010: Institute for Supply Management

Non-Manufacturing
Non-manufacturing survey respondents forecast that business revenues for 2010 will be slightly improved over 2009 by an average of 1.3 percent. This is substantially more than the 4.5 percent decrease reported for 2009, and also more than the 2.6 percent decrease reported one year ago for 2008 revenues over 2007 revenues. The 40 percent of respondents forecasting better business in 2010 than in 2009 estimate an average nominal (before adjusting for inflation) revenue increase of 9.2 percent. This is in contrast to an average nominal decrease of 10.3 percent forecast by the 23 percent who predict worse business in 2010. The remaining 37 percent see no change in 2010. The eight industries expecting increases in revenues in 2010 — in order of percentage increase — are: Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Finance & Insurance; Wholesale Trade; Retail Trade; Other Services(b); Information; and Agriculture, Forestry, Fishing & Hunting.

PROFIT MARGINS

Manufacturing
Survey respondents report that profit margins declined on average during the second and third quarters of 2009 as 34 percent experienced an increase in profit margins, 40 percent had lower margins, and 26 percent reported no change. However, expectations are for a slight growth between now and April of 2010 as 26 percent of respondents forecast better profit margins, 25 percent predict lower profit margins, and 49 percent predict no change.

Non-Manufacturing
Non-manufacturing supply management executives were asked about changes in profit margins that their organizations recently experienced and are expecting in the near future. Their responses indicate that 25 percent experienced an increase in profit margins during the second and third quarters of 2009, while 48 percent found smaller profit margins, and 27 percent had no change in margins during the same period. Looking ahead from now through April 2010, 33 percent of supply managers expect improved profit margins, 21 percent expect lower profit margins, and the remaining 46 percent of respondents anticipate no change in their profit margins.