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ECONOMIC GROWTH TO CONTINUE THROUGHOUT 2018

FOR RELEASE: May 7, 2018

Contact:   Kristina M. Cahill
Report On Business® Analyst
ISM, ROB/Research Manager
Tempe, Arizona
480-752-6276, Ext. 3015
E-mail: kcahill@instituteforsupplymanagement.org



Manufacturing Growth Continues in 2018
Revenue to Increase 6.6%
Capital Expenditures to Increase 10.1%
Capacity Utilization Currently at 85.8%

Non-Manufacturing Growth Continues in 2018
Revenue to Increase 3.2%
Capital Expenditures to Increase 6.8%
Capacity Utilization Currently at 85.5%

 

(Tempe, AZ) — Economic growth is expected to continue in the U.S. throughout 2018, say the nation's purchasing and supply executives in their Spring 2018 Semiannual Economic Forecast. Expectations for the remainder of 2018 continue to be positive in both the manufacturing and non-manufacturing sectors.

These projections are part of the forecast issued by the Institute for Supply Management® (ISM®) Business Survey Committees. The forecast was presented today by Timothy R. Fiore, CPSM, C.P.M, chair of the ISM Manufacturing Business Survey Committee; and by Anthony S. Nieves, CPSM, C.P.M., A.P.P., CFPM, chair of the ISM Non-Manufacturing Business Survey Committee.

Manufacturing Summary

Sixty-two percent of respondents from the panel of manufacturing supply management executives predict their revenues, on average, will be 11.6 percent greater in 2018 compared to 2017, 5 percent expect a 11.9 percent decline, and 33 percent foresee no change in revenue. This yields an overall average forecast of 6.6 percent revenue growth among manufacturers for 2018. This current prediction is 1.5 percentage points above the December 2017 forecast of 5.1-percent revenue growth for 2018 and is 2.5 percentage points above the actual revenue growth reported for all of 2017. With operating rate at 85.8 percent, an expected capital expenditure increase of 10.1 percent, an increase of 5 percent for prices paid for raw materials, and employment expected to increase by 1.8 percent by the end of 2018 compared to the end of 2017, manufacturing is positioned to grow revenues while managing costs through the remainder of the year. “With 15 of the 18 manufacturing sector industries predicting revenue growth in 2018, when compared to 2017, U.S. manufacturing continues to move in a positive direction. However, finding and onboarding qualified labor and being able to pass on raw material price increases will ultimately define manufacturing revenues and profitability,” says Fiore.

The 15 industries reporting expectations of growth in revenue for 2018 — listed in order — are: Miscellaneous Manufacturing; Fabricated Metal Products; Transportation Equipment; Plastics & Rubber Products; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Wood Products; Primary Metals; Machinery; Chemical Products; Paper Products; Furniture & Related Products; Food, Beverage & Tobacco Products; and Nonmetallic Mineral Products.

 

The manufacturing panel was also asked Special Questions related to the impact thus far in 2018 on the following: (1) In the past six months, has your firm had difficulty hiring workers to fill open positions? (2) In the past six months, has your firm raised wages to recruit new hires? (3) In the past six months, has your firm offered additional training for new hires? (4) In the past six months, has your firm increased, decreased or left unchanged its capital spending plans for the next 12 months? And why did you say so? (5) Do you believe that tariffs will raise the price of the goods that you produce and deliver to your customers? (6) If you believe that tariffs will raise the price of your goods to your customers, by how much? (7) Do you believe that tariffs will cause delays and disruptions in your supply chain? Their responses are provided at the end of this report.

Non-Manufacturing Summary

Forty-nine percent of non-manufacturing purchasing and supply executives expect their 2018 revenues to be greater by 7.1 percent as compared to 2018. Respondents currently expect a 3.2 percent net increase in overall revenue, which is less than the 6 percent increase that was forecasted in December 2017. “Non-manufacturing will continue to grow for the balance of 2018. Non-manufacturing companies continue to operate efficiently, which is reflected by the high percentage of capacity utilization. Supply managers have indicated that prices are projected to increase 2.1 percent over the year. Employment is projected to grow 1.5 percent. Sixteen out of 18 industries are forecasting increased revenues, which is fewer than the 17 industries that forecasted increased revenues last year. The non-manufacturing sector will continue economic growth throughout the year,” says Nieves.

The 16 non-manufacturing industries expecting increases in revenue in 2018 — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Mining; Transportation & Warehousing; Information; Management of Companies & Support Services; Construction; Arts, Entertainment & Recreation; Wholesale Trade; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Health Care & Social Assistance; Finance & Insurance; Retail Trade; Utilities; Public Administration; and Accommodation & Food Services.

 

The non-manufacturing panel was also asked Special Questions related to the impact thus far in 2018 on the following: (1) In the past six months, has your firm had difficulty hiring workers to fill open positions? (2) In the past six months, has your firm raised wages to recruit new hires? (3) In the past six months, has your firm offered additional training for new hires? (4) In the past six months, has your firm increased, decreased or left unchanged its capital spending plans for the next 12 months? And why did you say so? (5) Do you believe that tariffs will raise the price of the goods that you produce and deliver to your customers? (6) If you believe that tariffs will raise the price of your goods to your customers, by how much? (7) Do you believe that tariffs will cause delays and disruptions in your supply chain? Their responses are provided at the end of this report.

 


OPERATING RATE

Manufacturing

Purchasing and supply managers report that their companies are currently operating, on average, at 85.8 percent of normal capacity, the same as in December 2017, as well as an increase from the 82.5 percent reported in May 2017. The 11 industries reporting operating capacity levels at or above the average capacity of 85.8 percent — listed in order — are: Apparel, Leather & Allied Products; Wood Products; Paper Products; Petroleum & Coal Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Textile Mills; Chemical Products; Transportation Equipment; Computer & Electronic Products; and Furniture & Related Products.

Non-Manufacturing

Non-manufacturing purchasing and supply executives report that their organizations are currently operating at 85.5 percent of normal capacity. This is 6.4 percent less than what was reported in December 2017 and less than the 86.9 percent reported in May 2017. The nine industries operating at capacity levels above the average rate of 85.5 percent — listed in order — are: Real Estate, Rental & Leasing; Mining; Retail Trade; Finance & Insurance; Public Administration; Accommodation & Food Services; Transportation & Warehousing; Health Care & Social Assistance; and Construction.

Operating Rate
 ManufacturingNon-Manufacturing
  May
2017
Dec
2017
May
2018
May
2017
Dec
2017
May
2018
90%+ 37% 50% 47% 62% 58% 52%
50%-89% 60% 49% 51% 36% 40% 45%
Below 50% 3% 1% 2% 2% 2% 3%
Est. Overall Average 82.5% 85.8% 85.8% 86.9% 91.9% 85.5%

 


PRODUCTION CAPACITY

Manufacturing

Production capacity in manufacturing is expected to increase 4.9 percent in 2018. This increase is more than the 2.7-percent increase predicted in December 2017 and is greater than the 4.3-percent increase reported in December 2017 for all of 2017. This reflects the continuing strength in the sector, as 43 percent of respondents expect an average capacity increase of 13.3 percent, 3 percent expect decreases averaging 29.6 percent, and 54 percent expect no change. The 15 industries expecting production capacity increases for 2018 — listed in order — are: Wood Products; Miscellaneous Manufacturing; Plastics & Rubber Products; Furniture & Related Products; Apparel, Leather & Allied Products; Fabricated Metal Products; Petroleum & Coal Products; Primary Metals; Transportation Equipment; Food, Beverage & Tobacco Products; Machinery; Computer & Electronic Products; Chemical Products; Paper Products; and Electrical Equipment, Appliances & Components.

Manufacturing Production Capacity
 For 2017For 2018For 2018
  Reported
Dec 2017
Magnitude
of Change
Predicted
Dec 2017
Magnitude
of Change
Predicted
May 2018
Magnitude
of Change
Higher 46% +10.5% 48% +7.4% 43% +13.3%
Same 48% NA 49% NA 54% NA
Lower 6% -9.8% 3% -27.3% 3% -29.6%
Net Average   +4.3%   +2.7%   +4.9%

 

Non-Manufacturing

The capacity to produce products or provide services in the non-manufacturing sector is expected to increase 3.8 percent during 2018. This compares to an increase of 2.9 percent reported for 2017, and a prediction in December 2017 for an increase of 3.4 percent for 2018. Twenty-four percent of non-manufacturing respondents expect their capacity for 2018 to increase by an average of 16.6 percent, and 1 percent of the respondents foresee their capacity decreasing by an average of 8.3 percent. Seventy-five percent expect no change in their capacity. The 12 industries expecting to add to their production capacity in 2018 — listed in order — are: Wholesale Trade; Finance & Insurance; Professional, Scientific & Technical Services; Other Services; Construction; Information; Retail Trade; Health Care & Social Assistance; Public Administration; Management of Companies & Support Services; Real Estate, Rental & Leasing; and Accommodation & Food Services.

Non-Manufacturing Production or Provision Capacity
 For 2017For 2018For 2018
  Reported
Dec 2017
Magnitude
of Change
Predicted
Dec 2017
Magnitude
of Change
Predicted
May 2018
Magnitude
of Change
Higher 32% +10.9% 39% +8.9% 24% +16.6
Same 62% NA 59% NA 75% NA
Lower 6% -9.4% 2% -5.7% 1% -8.3
Net Average   +2.9%   +3.4%   +3.8

 


PREDICTED CAPITAL EXPENDITURES — 2018 vs. 2017

Manufacturing

Survey respondents expect a 10.1-percent increase in capital expenditures in 2018. This is notably higher than the 2.7-percent increase predicted by the panel in the December 2017 forecast for 2018. Currently, 34 percent of respondents predict increased capital expenditures in 2018, with an average increase of 42.1 percent, and 14 percent said their capital spending would decrease an average of 30.5 percent. Fifty-two percent say they will spend the same in 2018 as they did in 2017. The 13 industries expecting increases in capital expenditures in 2018 compared to 2017 — listed in order — are: Furniture & Related Products; Primary Metals; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Transportation Equipment; Chemical Products; Fabricated Metal Products; Apparel, Leather & Allied Products; Miscellaneous Manufacturing; Petroleum & Coal Products; Paper Products; and Machinery

Non-Manufacturing

Non-manufacturing purchasing and supply executives are expecting to increase their level of capital expenditures 6.8 percent in 2018 compared to 2017. The 29 percent of members expecting to spend more predict an average increase of 30.6 percent. Seven percent of respondents anticipate an average decrease of 29.1 percent. Sixty-four percent of the respondents expect to spend the same on capital expenditures in 2018 as in 2017. The 12 industries expecting an increase in capital expenditures in 2018 from 2017 — listed in order — are: Public Administration; Wholesale Trade; Transportation & Warehousing; Information; Arts, Entertainment & Recreation; Health Care & Social Assistance; Management of Companies & Support Services; Finance & Insurance; Mining; Construction; Real Estate, Rental & Leasing; and Accommodation & Food Services.

Predicted Capital Expenditures 2018 vs. 2017
 ManufacturingNon-Manufacturing
  Predicted
Dec 2017
Predicted
May 2018
Magnitude
of Change
Predicted
Dec 2017
Predicted
May 2018
Magnitude
of Change
Higher 41% 34% +42.1% 45% 29% +30.6%
Same 42% 52% NA 42% 64% NA
Lower 17% 14% -30.5% 13% 7% -29.1%
Net Average +2.7%   +10.1% +3.8%   +6.8%

 


PRICES — Changes Between End of 2017 and April 2018

Manufacturing

In the December 2017 forecast, respondents predicted an increase of 1.3 percent in prices paid during the first four months of 2018; they now report prices actually increased by 4.8 percent. The 70 percent who say their prices are higher now than at the end of 2017 report an average increase of 7.1 percent, while the 4 percent who report lower prices report an average decrease of 4.5 percent. The remaining 26 percent indicate no change for the period. All 18 manufacturing industries reported an increase in prices paid for the first part of 2018 in the following order: Fabricated Metal Products; Miscellaneous Manufacturing; Furniture & Related Products; Wood Products; Apparel, Leather & Allied Products; Primary Metals; Machinery; Transportation Equipment; Plastics & Rubber Products; Chemical Products; Paper Products; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Printing & Related Support Activities; Computer & Electronic Products; Nonmetallic Mineral Products; Textile Mills; and Petroleum & Coal Products

 

Non-Manufacturing

Non-Manufacturing respondents report that their purchases in the first four months of this year cost an average of 1.3 percent more than at the end of 2017. This is 0.2 percentage point higher than the 1.1-percent increase predicted in December 2017 for the first four months of 2018. Thirty-nine percent of non-manufacturing respondents report that prices increased an average of 4.6 percent in the first part of 2017. Eight percent report price decreases averaging 6.1 percent. The remaining 53 percent indicate no change in prices paid in the first four months of 2018. The 14 industries reporting an increase in prices paid in the first part of 2018 — listed in order — are: Construction; Public Administration; Mining; Wholesale Trade; Transportation & Warehousing; Professional, Scientific & Technical Services; Retail Trade; Accommodation & Food Services; Real Estate, Rental & Leasing; Health Care & Social Assistance; Management of Companies & Support Services; Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing & Hunting; and Finance & Insurance.

Prices — Changes Between End of 2017 and May 2018
 ManufacturingNon-Manufacturing
  Predicted
Dec 2017
Reported
May 2018
Magnitude
of Change
Predicted
Dec 2017
Reported
May 2018
Magnitude
of Change
Higher 57% 70% +7.1% 57% 39% +4.6%
Same 29% 26% NA 33% 53% NA
Lower 14% 4% -4.5% 10% 8% -6.1%
Net Average +1.3%   +4.8% +1.1%   +1.3%

 


PRICES — Predicted Changes Between End of 2017 and End of 2018

Manufacturing

When asked to predict 2018 price changes, 70 percent of respondents expect prices to increase by 7.3 percent for the full year of 2018 compared to the end of 2017. Meanwhile, 4 percent anticipate decreases averaging 3.6 percent. Including the 26 percent who expect no change in prices, survey respondents expect a net average prices increase of 5 percent for all of 2018, indicating that prices are expected to rise 0.2 percentage point over the remainder of the year. All 18 manufacturing industries are predicting price increases for all of 2018 in the following order: Furniture & Related Products; Miscellaneous Manufacturing; Fabricated Metal Products; Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Primary Metals; Transportation Equipment; Wood Products; Chemical Products; Machinery; Textile Mills; Paper Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; Nonmetallic Mineral Products; Printing & Related Support Activities; and Petroleum & Coal Products.

Non-Manufacturing

For 2018, non-manufacturing respondents expect prices to increase, on average, 2.1 percent when compared to the prices at the end of 2017. Given that respondents have reported that prices have increased 1.3 percent through May 2018, prices are projected to increase 0.8 percentage point over the remainder of the year. Fifty-three percent of respondents anticipate price increases averaging 4.8 percent. Nine percent of respondents expect price decreases of 6 percent, and 38 percent do not expect prices to change. The 16 industries expecting price increases in 2018 — listed in order — are: Construction; Mining; Transportation & Warehousing; Public Administration; Wholesale Trade; Professional, Scientific & Technical Services; Accommodation & Food Services; Finance & Insurance; Management of Companies & Support Services; Arts, Entertainment & Recreation; Real Estate, Rental & Leasing; Other Services; Utilities; Information; Retail Trade; and Health Care & Social Assistance.

Prices — Predicted Changes Between End of 2017 and End of 2018
 ManufacturingNon-Manufacturing
  Predicted
Dec 2017
Predicted
May 2018
Magnitude
of Change
Predicted
Dec 2017
Predicted
May 2018
Magnitude
of Change
Higher 60% 70% +7.3% 63% 53% +4.8%
Same 23% 26% NA 27% 38% NA
Lower 17% 4% -3.6% 10% 9% -6.0%
Net Average +1.8%   +5.0% +2.2%   +2.1%

EMPLOYMENT

Employment - Predicted Changes Between End of 2017 and End of 2018

Manufacturing

ISM’s Manufacturing Business Survey respondents forecast that manufacturing employment will increase by 1.8 percent by the end of 2018, compared to the end of 2017. Thirty-eight percent of respondents expect employment to be 7.7, on average, percent higher, while 9 percent of respondents predict employment to be lower by 13.1 percent. The remaining 53 percent of respondents expect their employment levels to be unchanged for the remainder of 2018. The 12 industries reporting expectations of growth in employment during 2018 — listed in order — are: Miscellaneous Manufacturing; Fabricated Metal Products; Textile Mills; Plastics & Rubber Products; Food, Beverage & Tobacco Products; Petroleum & Coal Products; Machinery; Primary Metals; Furniture & Related Products; Paper Products; Chemical Products; and Computer & Electronic Products.

Non-Manufacturing

ISM’s Non-Manufacturing Business Survey Committee respondents forecast that employment will increase 1.5 percent through the end of 2018. For the remaining months of 2018, 33 percent expect employment to increase, on average, 7.4 percent, 12 percent anticipate employment to decrease by 8.5 percent, and 55 percent expect their employment levels to be unchanged. The 11 industries anticipating increases in employment — listed in order — are: Other Services; Transportation & Warehousing; Mining; Public Administration; Construction; Wholesale Trade; Accommodation & Food Services; Health Care & Social Assistance; Agriculture, Forestry, Fishing & Hunting; Professional, Scientific & Technical Services; and Management of Companies & Support Services.

Employment — Predicted Changes Between End of 2017 and End of 2018*
 ManufacturingNon-Manufacturing
  Predicted
Dec 2017
Predicted
May 2018
Magnitude
of Change
Predicted
Dec 2017
Predicted
May 2018
Magnitude
of Change
Higher 44% 38% +7.7% 44% 33% +7.4%
Same 46% 53% NA 42% 55% NA
Lower 10% 9% -13.1% 14% 12% -8.5%
Net Average +1.2%   +1.8% +1.5%   +1.5%

*Change made to questionnaire in 2017. Respondents are now asked now for a year-over-year eployment comparison rather than a partial-year update, as previously reported.

 


BUSINESS REVENUES

Business Revenues Comparison — 2018 vs. 2017

Manufacturing

Increased revenue is expected in 2018 as purchasing and supply management executives predict an overall net increase of 6.6 percent in sector business revenue for 2018 over 2017. This is 1.5 percentage points higher than the 5.1-percent increase forecast in December 2017 for all of 2018, and 2.5 percentage points higher than the 4.1-percent increase reported for 2017 over 2016. Sixty-two percent of respondents say that revenues for 2018 will increase, on average, 11.6 percent over 2017. Conversely, 5 percent say their revenues will decrease, on average, 11.9 percent, and the remaining 33 percent indicate no change. Of the 18 manufacturing industries, 15 are reporting expectations of growth in revenue during 2018 in the following order: Miscellaneous Manufacturing; Fabricated Metal Products; Transportation Equipment; Plastics & Rubber Products; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Wood Products; Primary Metals; Machinery; Chemical Products; Paper Products; Furniture & Related Products; Food, Beverage & Tobacco Products; and Nonmetallic Mineral Products.

Manufacturing Business Revenue
2017 vs. 20162018 vs. 2017
  Reported
Dec 2017
% Change Predicted
Dec 2017
% Change Predicted
May 2018
% Change
Higher 61% +8.7% 70% +7.8% 62% +11.6%
Same 24% NA 26% NA 33% NA
Lower 15% -8.1% 4% -7.2% 5% -11.9%
Net Average   +4.1%   +5.1%   +6.6%

 

Non-Manufacturing

Non-manufacturing respondents forecast that sector business revenue for 2018 will increase 3.2 percent compared to 2017. This is 2.8 percent less than the 6 percent that was predicted in December 2017 for 2018. The 49 percent of respondents forecasting better business in 2018 than in 2017 estimate an average revenue increase of 7.1 percent. The 5 percent who predict less business in 2018 forecast an average decrease of 7.7 percent. The remaining 46 percent see no change in revenues for 2018. The 16 industries expecting an increase in revenues in 2018 — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Mining; Transportation & Warehousing; Information; Management of Companies & Support Services; Construction; Arts, Entertainment & Recreation; Wholesale Trade; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Health Care & Social Assistance; Finance & Insurance; Retail Trade; Utilities; Public Administration; and Accommodation & Food Services.

Non-Manufacturing Business Revenue
2017 vs. 20162018 vs. 2017
  Reported
Dec 2017
% Change Predicted
Dec 2017
% Change Predicted
May 2018
% Change
Higher 55% +13.5% 59% +11.1% 49% +7.1%
Same 26% NA 31% NA 46% NA
Lower 19% -10.1% 10% -5.7% 5% -7.7%
Net Average   +5.7%   +6.0%   +3.2%

 

 

SPECIAL QUESTIONS RELATED TO THE EARLY MONTHS OF 2018

We asked the panelists to tell us: (1) In the past six months, has your firm had difficulty hiring workers to fill open positions? (2) In the past six months, has your firm raised wages to recruit new hires? (3) In the past six months, has your firm offered additional training for new hires? (4) In the past six months, has your firm increased, decreased, or left unchanged its capital spending plans for the next 12 months? And why did you say so?

 

We also asked three questions related to tariffs. (1) Do you believe that tariffs will raise the price of the goods that you produce and deliver to your customers? (2) If you believe that tariffs will raise the price of your goods to your customers, by how much? (3) Do you believe that tariffs will cause delays and disruptions in your supply chain?

 

Manufacturing

Answers to the first Special Question, “In the past six months, has your firm had difficulty hiring workers to fill open positions?”:

  • Yes, we have had difficulty hiring (77.9%)
  • No, we have not had difficulty hiring (22.1%)

Answers to the second Special Question, "In the past six months, has your firm raised wages to recruit new hires?":

  • Yes (53.3%)
  • No (46.7%)

Answers to the third Special Question: “In the past six months, has your firm offered additional training for new hires?”:

  • Yes (47.9%)
  • No (52.1%)

Answers to the fourth Special Question: “In the past six months, has your firm increased, decreased or left unchanged its capital spending plans for the next 12 months? And why did you say so?”:

  • Increased capital spending plans (35.5%)
  • Decreased capital spending plans (11.7%)
  • No change to capital spending plans (52.8%)

As a follow-up to the fourth Special Question, respondents were asked why they answered as they did.

  • The reasons given by those who increased capital spending plans (35.5%):
    • General business outlook (68.9%)
    • Recent business tax reform (14.4%)
    • Prospects for regulatory reform (2.2%)
    • Other (14.4%)

 

  • The reasons given by those who decreased capital spending plans (11.7%):
    • General business outlook (50.0%)
    • Prospects for regulatory reform (3.3%)
    • Recent business tax reform (3.3%)
    • Other (40.0%)
    • Not applicable (3.3%)

Answers to the fifth Special Question: “Do you believe that tariffs will raise the price of the goods that you produce and deliver to your customers?”:

  • Yes (73.9%)
  • No (26.1%)

In response to the sixth Special Question: “If you believe that tariffs will raise the price of your goods to your customers, by how much?”, the average increase was 5.4 percent, with a median of 3.0 percent.

 

Answers to the seventh Special Question: “Do you believe that tariffs will cause delays and disruptions in your supply chain?”:

  • Yes (57.5%)
  • No (42.5%)

Non-Manufacturing

Answers to the first Special Question,: “In the past six months, has your firm had difficulty hiring workers to fill open positions?”:

  • Yes, we have had difficulty hiring (64.4%)
  • No, we have not had difficulty hiring (35.6%)

Answers to the second Special Question, “In the past six months, has your firm raised wages to recruit new hires?”:

  • Yes (35.7%)
  • No (64.3%)

Answers to the third Special Question, “In the past six months, has your firm offered additional training for new hires?”:

  • Yes (50%)
  • No (50%)

Answers to the fourth Special Question, “In the past six months, has your firm increased, decreased or left unchanged its capital spending plans for the next 12 months? And why did you say so?”:

  • Increased capital spending plans (31.4%)
  • Decreased capital spending plans (10.1%)
  • No change to capital spending plans (58.5%)

As a follow-up to the fourth Special Question, respondents were asked why they answered as they did:

      • The reasons given by those who increased capital spending plans (31.4%):
        • General business outlook (57.6%)
        • Recent business tax reform (18.6%)
        • Prospects for regulatory reform (3.4%)
        • Other (18.6%)
      • The reasons given by those who decreased capital spending plans (10.1%):
        • General business outlook (57.9%)
        • Prospects for regulatory reform (5.3%)
        • Recent business tax reform (0%)
        • Other (36.8%)

 

Answers to the fifth Special Question: “Do you believe that tariffs will raise the price of the goods that you produce and deliver to your customers?”:

      • Yes (50.3%)
      • No (49.7%)

In response to the sixth Special Question, “If you believe that tariffs will raise the price of your goods to your customers, by how much?”, the percent given was 7.2% with a median of 5.0%.

Answers to the seventh Special Question, “Do you believe that tariffs will cause delays and disruptions in your supply chain?”:

      • Yes (59%)
      • No (41%)

 


SUMMARY

Manufacturing

        • Operating rate is currently at 85.8 percent of normal capacity.
        • Production capacity is expected to increase 4.9 percent in 2018.
        • Capital expenditures are expected to increase 10.1 percent in 2018.
        • Prices paid increased 4.8 percent through the end of April 2018.
        • Prices of raw materials are expected to increase a total of 5.0 percent for all of 2018, indicating an expected increase of 0.2 percent in prices for the remainder of the year.
        • Manufacturing employment is expected to increase by 1.8 percent in 2018.
        • Manufacturing revenue is expected to increase 6.6 percent in 2018.
        • Overall, manufacturing is expected to exhibit a positive growth trend in 2018.

Non-Manufacturing

        • Operating rate is currently 85.5 percent of normal capacity.
        • Production capacity is expected to increase 3.8 percent in 2018.
        • Capital expenditures are expected to increase 6.8 percent in 2018.
        • Prices paid increased 1.3 percent through the end of April 2018.
        • Prices were reported to have increased 1.3 percent in the first four months of the year and are expected to increase 0.8 percentage point for the rest of the year, for a total projected net annual increase of 2.1 percent.
        • Non-manufacturing employment is expected to increase 1.5 percent during the rest of 2018.
        • Non-manufacturing revenue is expected to increase 3.2 percent in 2018.
        • The non-manufacturing sector is projected to have continued growth in 2018.

*Miscellaneous Manufacturing items include products such as Medical Equipment and Supplies, Jewelry, Sporting Goods, Toys and Office Supplies.

**Other Services include: Equipment & Machinery Repairing; Promoting or Administering Religious Activities; Grant making; Advocacy; and Providing Dry-Cleaning & Laundry Services, Personal Care Services, Death Care Services, Pet Care Services, Photofinishing Services, Temporary Parking Services, and Dating Services.

In addition to the forecast, the Manufacturing ISM® Report On Business® is issued monthly on the first business day of each month and is considered by many economists to be the most reliable near-term economic barometer available. It is reviewed regularly by top government agencies and economic business leaders. The report, compiled from responses to questions asked of approximately 350 purchasing and supply executives across the country, tracks industrial production, new orders, inventories, supplier deliveries, employment, buying policies and prices. Manufacturing Business Survey Committee responses are divided into the following NAICS code categories: Food, Beverage & Tobacco Products; Textile Mills; Apparel, Leather & Allied Products; Wood Products; Paper Products; Printing & Related Support Activities; Petroleum & Coal Products; Chemical Products; Plastics & Rubber Products; Nonmetallic Mineral Products; Primary Metals; Fabricated Metal Products; Machinery; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Furniture & Related Products; and Miscellaneous Manufacturing*.

Covering the non-manufacturing sector, ISM® debuted the Non-Manufacturing ISM® Report On Business® in June 1998. The Non-Manufacturing ISM® Report On Business® is released on the third business day of each month, and is based on data received from purchasing and supply executives from 18 different non-manufacturing industries across the country. The Non-Manufacturing ISM® Report On Business® is diversified by NAICS, based on each industry's contribution to gross domestic product (GDP). The Non-Manufacturing Business Survey Committee responses are divided into the following NAICS code categories: Agriculture, Forestry, Fishing & Hunting; Mining; Utilities; Construction; Wholesale Trade; Retail Trade; Transportation & Warehousing; Information; Finance & Insurance; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Management of Companies & Support Services; Educational Services; Health Care & Social Assistance; Arts, Entertainment & Recreation; Accommodation & Food Services; Other Services**; and Public Administration. The report covers business activity, new orders, backlog of orders, new export orders, inventory change, inventory sentiment, imports, prices, employment, and supplier deliveries.

About Institute for Supply Management®

Institute for Supply Management® (ISM®) serves supply management professionals in more than 90 countries. Its 50,000 members around the world manage about US$1 trillion in corporate and government supply chain procurement annually. Founded in 1915 as the first supply management institute in the world, ISM is committed to advancing the practice of supply management to drive value and competitive advantage for its members, contributing to a prosperous and sustainable world. ISM leads the profession through the ISM Report On Business®, its highly regarded certification programs and the newly launched ISM Mastery Model®. This report has been issued by the association since 1931, except for a four-year interruption during World War II.

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The Institute for Supply Management® ("ISM") Report On Business® (both Manufacturing and Non-Manufacturing) ("ISM ROB") contains information, text, files, images, video, sounds, musical works, works of authorship, applications, and any other materials or content (collectively, "Content") of ISM ("ISM ROB Content"). ISM ROB Content is protected by copyright, trademark, trade secret, and other laws, and as between you and ISM, ISM owns and retains all rights in the ISM ROB Content. ISM hereby grants you a limited, revocable, nonsublicensable license to access and display on your individual device the ISM ROB Content (excluding any software code) solely for your personal, non-commercial use. The ISM ROB Content may also contain Content of users and other ISM licensors. Except as provided herein or as explicitly allowed in writing by ISM, you may not copy, download, stream, capture, reproduce, duplicate, archive, upload, modify, translate, publish, broadcast, transmit, retransmit, distribute, perform, display, sell, or otherwise use any ISM ROB Content.

Except as explicitly and expressly permitted by ISM, you are strictly prohibited from creating works or materials (including but not limited to tables, charts, data streams, time series variables, fonts, icons, link buttons, wallpaper, desktop themes, on-line postcards, montages, mash-ups and similar videos, greeting cards, and unlicensed merchandise) that derive from or are based on the ISM ROB Content. This prohibition applies regardless of whether the derivative works or materials are sold, bartered, or given away. You may not either directly or through the use of any device, software, internet site, web-based service, or other means remove, alter, bypass, avoid, interfere with, or circumvent any copyright, trademark, or other proprietary notices marked on the Content or any digital rights management mechanism, device, or other content protection or access control measure associated with the Content including geo-filtering mechanisms. Without prior written authorization from ISM, you may not build a business utilizing the Content, whether or not for profit.

You may not create, recreate, distribute, incorporate in other work, or advertise an index of any portion of the Content unless you receive prior written authorization from ISM. Requests for permission to reproduce or distribute ISM ROB Content can be made by contacting in writing at: ISM Research, Institute for Supply Management, 309 W. Elliot Road, Suite 113, Tempe, AZ 85284-1556, or by emailing kcahill@instituteforsupplymanagement.org, Subject: Content Request.

ISM shall not have any liability, duty, or obligation for or relating to the ISM ROB Content or other information contained herein, any errors, inaccuracies, omissions or delays in providing any ISM ROB Content, or for any actions taken in reliance thereon. In no event shall ISM be liable for any special, incidental, or consequential damages, arising out of the use of the ISM ROB. Report On Business®, PMI®, and NMI® are registered trademarks of Institute for Supply Management®. Institute for Supply Management® and ISM® are registered trademarks of Institute for Supply Management, Inc.

The full text version of each monthly report is posted on www.ismrob.org on the first and third business days of every month* after 10:00 a.m. (ET).

The next Manufacturing ISM® Report On Business® featuring the May 2018 data will be released at 10:00 a.m. ET on Friday, June 1, 2018.

The next Non-Manufacturing ISM® Report On Business® featuring the May 2018 data will be released at 10:00 a.m. ET on Tuesday, June 5, 2018.

*Unless the New York Stock Exchange is closed.



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