Economic Recovery Continues in 2010: Institute for Supply Management

SUMMARY

Manufacturing
The manufacturing sector is currently contracting, and the forecast indicates that it will continue to contract with significant improvement in the second half of 2009.

• Operating rate is 70.1 percent.

• Production capacity decreased by 5 percent in 2009.

• Production capacity is expected to increase by 2.7 percent in 2010.

• Capital expenditures decreased 7.8 percent in 2009.

• Capital expenditures are expected to decrease 4 percent in 2010.

• Prices paid decreased 4.6 percent in 2009.

• Overall 2010 prices paid are expected to increase 2.6 percent.

• Labor and benefit costs are expected to increase 1.4 percent in 2010.

• Manufacturing employment is expected to increase 1.5 percent in 2010.

• Expect growth in U.S. exports in 2010.

• Expect growth in U.S. imports in 2010.

• Manufacturing revenues (nominal) are down 10.7 percent in 2009.

• Manufacturing revenues (nominal) are expected to increase 5.7 percent in 2010.

• Major concerns to manufacturers: weak economy; healthcare and benefits costs; credit crisis; taxes; and high energy costs.

• The U.S. dollar is expected to weaken on average versus major trading partner currencies in 2010.

• Overall attitude of manufacturing management: optimistic, with 90 percent of respondents predicting 2010 will be the same as or better than 2009.

Non-Manufacturing
The non-manufacturing sector continues to expand and the forecast indicates an increased rate of expansion in 2010.

• Operating rate is currently 81.3 percent.

• Production capacity decreased 1.4 percent in 2009.

• Production and provision capacity is expected to increase 0.9 percent in 2010.

• Capital expenditures decreased 4.2 percent in 2009.

• Capital expenditures are expected to decrease 6.7 percent in 2010.

• Prices paid decreased 2.2 percent in 2009.

• Prices paid are expected to increase 1.1 percent in 2010.

• Labor and benefit costs are expected to remain the same in 2010.