Economic Recovery Continues in 2010: Institute for Supply Management

Non-Manufacturing
Of the 61 percent of non-manufacturing purchasers who answered this question, 9 percent anticipate increasing their purchased inventory-to-sales ratio during 2010. An additional 22 percent expect their ratio to drop, and 69 percent see no change. The diffusion index of 43.5 percent suggests the inventory-to-sales ratio will contract in 2010.

ECONOMIC CONCERNS

Manufacturing
Purchasers have a number of supply- and cost-related concerns on their list for 2010. The most frequently cited concerns are:

1. Weak economy

2. Healthcare and benefits costs

3. Credit crisis

4. Taxes

5. High energy costs

Non-Manufacturing
The number one economic concern of non-manufacturing supply management executives at the present time is the state of the overall economy. The most frequently cited concerns are:

1. Weak economy

2. Healthcare and benefits costs

3. Credit crisis

4. Labor costs

5. High energy costs

OUTLOOK FOR THE NEXT 12 MONTHS

Manufacturing
Survey respondents are optimistic about the next 12 months, when compared to their response in December 2008. The 55 percent who report a better outlook is much greater than the 20 percent response received in December 2008. The 35 percent who report that the outlook is the same is up from the 22 percent reported in December 2008, and the 10 percent who indicated the outlook to be worse is lower than the 58 percent reported in December 2008.

Non-Manufacturing
Non-manufacturing survey respondents have a positive outlook now compared to when they looked ahead in December 2008. The 50 percent who currently report a better outlook is higher than the 16 percent who had that outlook in December 2008. Thirty percent expect no change, and 20 percent feel the outlook will be worse over the next 12 months.

U.S. DOLLAR — Predicted Strength vs. Major Trading Currencies — in 2010 — Manufacturing Only

Manufacturing
Purchasing and supply executives are pessimistic concerning the prospective strength of the U.S. dollar for 2010. The average diffusion index for this forecast is 40.5 percent, significantly weaker than the December 2008 forecast average of 71 percent. The U.S. dollar is expected to weaken against all of the major currencies.