These projections are part of the forecast issued by the Business Survey Committee of the Institute for Supply Management® (ISM®). The forecast was released today by Bradley J. Holcomb, CPSM, CPSD, chair of the ISM Manufacturing Business Survey Committee, and by Anthony S. Nieves, CPSM, C.P.M., CFPM, chair of the ISM Non-Manufacturing Business Survey Committee.
Manufacturing Summary
Expectations for 2015 are positive as 67 percent of survey respondents expect revenues to be greater in 2015 than in 2014. The panel of purchasing and supply executives expects a 5.6 percent net increase in overall revenues for 2015, compared to a 3.6 percent increase reported for 2014 over 2013 revenues. The 15 manufacturing industries expecting revenue improvement in 2015 over 2014 — listed in order — are: Food, Beverage & Tobacco Products; Furniture & Related Products; Computer & Electronic Products; Fabricated Metal Products; Miscellaneous Manufacturing; Machinery; Nonmetallic Mineral Products; Printing & Related Support Activities; Paper Products; Chemical Products; Transportation Equipment; Textile Mills; Primary Metals; Plastics & Rubber Products; and Electrical Equipment, Appliances & Components.
"Manufacturing purchasing and supply executives expect to see continued growth in 2015. They are optimistic about their overall business prospects for the first half of 2015, and are similarly optimistic about the second half of 2015," said Holcomb. "Manufacturing experienced 18 consecutive months of growth from June 2013 through November 2014, as reported in the monthly Manufacturing ISM Report On Business®, and our forecast calls for a continuation of growth in 2015, building on the momentum reported in 2014. Respondents expect raw materials pricing pressures in 2015 to be low, similar to levels experienced in 2014, and expect their margins will improve in 2015. Manufacturers are also predicting growth in both exports and imports in 2015 over 2014."
In the manufacturing sector, respondents report operating at 83.7 percent of their normal capacity, up 1.4 percentage points from the 82.3 percent reported in April 2014. Purchasing and supply executives predict that capital expenditures will increase by 3.7 percent in 2015 over 2014, compared to a 14.7 percent increase reported for 2014 over 2013. Manufacturers have an expectation that employment in the sector will increase by 1.5 percent in 2015, while labor and benefit costs are expected to increase an average of 3.2 percent. Respondents also expect the U.S. dollar to strengthen against all seven currencies of major trading partners in 2015.
The panel also predicts the prices paid for raw materials will increase 1.2 percent during the first four months of 2015, and will increase an additional 0.3 percent during the balance of the year, with an overall increase of 1.5 percent for 2015. This compares to a reported 1.4 percent increase in raw materials prices for 2014 compared with 2013.
Two special questions were asked of our Panel. The first special question asks about unfilled job openings. The top three responses from our Manufacturing panel, with percentages of the total number of responses noted, were "Currently have a typical number of unfilled job openings" (39.5%), "Cannot find enough qualified applicants to fill job openings" (28.8%), and "Hiring less than usual due to economic uncertainty" (18.6%).
The second special question asked whether Manufacturing organizations plan to re-shore significant volumes of manufacturing/business processes in 2015. Of the three possible answers, 10.4 percent responded "Yes," 58.8 percent responded "No," and 30.8 percent responded "Not Applicable." For those organizations that responded "No," the most often cited main reason for not re-shoring in 2015 was that the "Cost advantage of off-shoring was still too favorable," with 53.7 percent of all respondents providing that reason.
Non-Manufacturing Summary
Sixty-two percent of non-manufacturing supply management executives expect their 2015 revenues to be greater than in 2014. They currently expect a 10 percent net increase in overall revenues for 2015 compared to a 5.1 percent increase reported for 2014 over 2013 revenues. The 15 non-manufacturing industries expecting revenue improvement in 2015 over 2014 — listed in order — are: Wholesale Trade; Professional, Scientific & Technical Services; Transportation & Warehousing; Construction; Other Services; Mining; Retail Trade; Accommodation & Food Services; Arts, Entertainment & Recreation; Public Administration; Real Estate, Rental & Leasing; Utilities; Health Care & Social Assistance; Finance & Insurance; and Information.
"Non-manufacturing supply managers report operating at 87.6 percent of their normal capacity, higher than the 86.3 percent reported in April 2014. They are optimistic about continued growth in the first half of 2015 compared to the second half of 2014, and they have a higher level of optimism about the next 12 months than they had last December for 2014," said Nieves. "They forecast that their capacity to produce products and provide services will rise by 4.3 percent during 2015, and capital expenditures will increase by 3.8 percent from 2014 levels. Non-manufacturers also predict their employment will increase by 1.7 percent during 2015."
Respondents in non-manufacturing industries expect the prices they pay for materials and services will increase by 2.5 percent during 2015. They also forecast their overall labor and benefit costs will increase 2.1 percent in 2015. Profit margins are reported to have increased in the second and third quarters of 2014, and respondents expect them to increase between now and April 2015.
Two special questions were asked of our Panel. The first special question was in response to some organizations that reported having more unfilled job openings than usual in 2014. The top three responses from our Non-Manufacturing panel, with percentages of the total number of responses noted, were "Currently have a typical number of unfilled job openings" (46.5%), "Cannot find enough qualified applicants to fill job openings" (19.1%), and "Hiring less than usual due to economic uncertainty" (15.9%).
The second special question asked whether Non-Manufacturing organizations plan to re-shore significant volumes of manufacturing/business processes in 2015. Of the three possible answers, 8.1 percent responded "Yes," 36 percent responded "No," and 55.9 percent responded "Not Applicable." For those organizations that responded "No," the most often cited main reason for not re-shoring in 2015 was that the "Cost advantage of off-shoring was still too favorable," with 52.1 percent of all respondents providing that reason.
OPERATING RATE
Manufacturing
Manufacturing purchasing and supply executives report their companies are currently operating at 83.7 percent of normal capacity. This is a moderate increase when compared to April 2014 (82.3 percent), and a notable increase when compared to December 2013 (80.3 percent). The November data from the Manufacturing ISM Report On Business® indicates the manufacturing sector is expanding for the 18th consecutive month. The following nine industries — listed in order — are operating above the average rate of 83.7 percent: Printing & Related Support Activities; Wood Products; Paper Products; Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Chemical Products; Computer & Electronic Products; and Food, Beverage & Tobacco Products.
Non-Manufacturing
Non-manufacturing supply executives report their organizations are currently operating at 87.6 percent of normal capacity. This is higher than the 86.3 percent reported in April 2014 and the 86.3 percent reported in December 2013. Considering production capacity increases reported in the following section of this forecast, this indicates that non-manufacturing industries are continuing to add capacity, but also find it necessary to maintain their utilization of capacity at a relatively high level. The 12 industries operating at or above the average capacity level of 87.6 percent — listed in order — are: Construction; Information; Educational Services; Agriculture, Forestry, Fishing & Hunting; Mining; Public Administration; Transportation & Warehousing; Retail Trade; Other Services; Accommodation & Food Services; Finance & Insurance; and Health Care & Social Assistance.
Operating Rate
| ||||||
|
Manufacturing
|
Non-Manufacturing
| |||||
|
Dec
2013
|
April
2014 |
Dec
2014 |
Dec
2013
|
April
2014 |
Dec
2014 | |
|
90%+
|
34%
|
42%
|
49%
|
53%
|
57%
|
56%
|
|
50%-89%
|
63%
|
54%
|
48%
|
47%
|
41%
|
42%
|
|
Below 50%
|
3%
|
4%
|
3%
|
0%
|
2%
|
2%
|
|
Est. Overall Average
|
80.3%
|
82.3%
|
83.7%
|
86.3%
|
86.3%
|
87.6%
|
PRODUCTION CAPACITY
Manufacturing
Production capacity in manufacturing increased 5.3 percent in 2014 as 47 percent of purchasing and supply executives reported an average capacity increase of 12.7 percent, 5 percent reported decreases averaging 15 percent, and 48 percent reported no change. This compares to a predicted increase of 4.8 percent for 2014 made in April 2014. Expectations for 2015 are for an increase of 5.6 percent. The 16 industries that report achieving an increase in production capacity in 2014 — listed in order — are: Nonmetallic Mineral Products; Fabricated Metal Products; Furniture & Related Products; Food, Beverage & Tobacco Products; Wood Products; Primary Metals; Computer & Electronic Products; Printing & Related Support Activities; Textile Mills; Machinery; Miscellaneous Manufacturing; Chemical Products; Apparel, Leather & Allied Products; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; and Plastics & Rubber Products.
Manufacturing Production Capacity
| ||||||
|
Predicted For 2014
|
Reported For 2014
|
Predicted For 2015
| ||||
|
Predicted
April 2014
|
Magnitude
of Change
|
Reported
Dec 2014
|
Magnitude
of Change |
Predicted
Dec 2014
|
Magnitude
of Change | |
|
Higher
|
44%
|
+12.7%
|
47%
|
+12.7%
|
53%
|
+11.6%
|
|
Same
|
48%
|
NA
|
48%
|
NA
|
41%
|
NA
|
|
Lower
|
8%
|
-11.0%
|
5%
|
-15.0%
|
6%
|
-10.3%
|
|
Net Average
|
+4.8%
|
+5.3%
|
+5.6%
| |||
The principal means of achieving increases in production capacity in 2014 were (in order of importance):
Additional personnel (permanent, temporary or contract)
More hours worked with existing personnel
Additional plant and/or equipment
Replaced equipment with technically advanced equipment
Non-Manufacturing
The capacity to produce products or provide services in the non-manufacturing sector increased 3.6 percent during 2014. This compares to the 2.3 percent increase reported in December 2013 for the year 2013, and is greater than what was predicted in April 2014 of a 3.1 percent increase for 2014. For 2015, an increase of 4.3 percent is predicted. For 2014, 29 percent of non-manufacturing supply managers indicate increases averaging 12.9 percent, and 1 percent of respondents indicate decreases averaging 5 percent. Seventy percent see no change in their capacity. The 14 industries reporting increases in capacity in 2014 — listed in order — are: Management of Companies & Support Services; Professional, Scientific & Technical Services; Transportation & Warehousing; Retail Trade; Construction; Information; Mining; Wholesale Trade; Other Services; Health Care & Social Assistance; Finance & Insurance; Utilities; Accommodation & Food Services; and Public Administration.
Non-Manufacturing Production or Provision Capacity
| ||||||
|
Predicted For 2014
|
Reported For 2014
|
Predicted For 2015
| ||||
|
Predicted
April 2014
|
Magnitude
of Change |
Reported
Dec 2014
|
Magnitude
of Change |
Predicted
Dec 2014
|
Magnitude
of Change | |
|
Higher
|
32%
|
+10.9%
|
29%
|
+12.9%
|
40%
|
+11.1%
|
|
Same
|
66%
|
NA
|
70%
|
NA
|
59%
|
NA
|
|
Lower
|
2%
|
-12.5%
|
1%
|
-5.0%
|
1%
|
-12.5%
|
|
Net Average
|
+3.1%
|
+3.6%
|
+4.3%
| |||
The principal means of achieving increases in production capacity in 2014 were (in order of importance):
Additional personnel (permanent, temporary or contract)
More hours worked with existing personnel
Additional plant and/or equipment
Replaced equipment with technically advanced equipment
CAPITAL EXPENDITURES — 2014 vs. 2013
Manufacturing
Purchasing and supply managers report 2014 capital expenditures increased 14.7 percent on average when compared to 2013 levels. The actual expenditures for 2014 were well above survey respondents' previous expectations, as they predicted an increase of 10.3 percent for 2014 in April 2014. The 45 percent of purchasers who reported increased capital expenditures in 2014 indicated an average increase of 37.8 percent, while the 10 percent who said their capital spending was reduced reported an average decrease of 23.1 percent. Forty-five percent of respondents said they spent the same in 2014 as in 2013. The 16 industries showing increases in capital expenditures for 2014 — listed in order of percentage increase — are: Textile Mills; Paper Products; Fabricated Metal Products; Chemical Products; Wood Products; Furniture & Related Products; Machinery; Transportation Equipment; Primary Metals; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Computer & Electronic Products; Printing & Related Support Activities; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; and Nonmetallic Mineral Products.
Non-Manufacturing
Non-manufacturing supply management executives report their level of capital expenditures in 2014 compared to 2013 increased 3.3 percent. This is greater than the 4.2 percent increase reported for 2013 one year ago, but notably less than the 10.8 percent increase predicted by respondents in April 2014. Thirty-nine percent of respondents report increases averaging 13.4 percent. An additional 14 percent report decreases averaging 12.9 percent. Forty-seven percent indicate they spent the same on capital expenditures in 2014 as in 2013. The 17 industries experiencing increases in capital expenditures in 2014 — listed in order — are: Transportation & Warehousing; Real Estate, Rental & Leasing; Agriculture, Forestry, Fishing & Hunting; Accommodation & Food Services; Arts, Entertainment & Recreation; Utilities; Public Administration; Management of Companies & Support Services; Construction; Retail Trade; Wholesale Trade; Information; Professional, Scientific & Technical Services; Mining; Educational Services; Other Services; and Finance & Insurance.
Capital Expenditures 2014 vs. 2013
| ||||||
|
Manufacturing
|
Non-Manufacturing
| |||||
|
Predicted
April 2014 |
Reported
Dec 2014 |
Magnitude
of Change |
Predicted
April 2014 |
Reported
Dec 2014 |
Magnitude
of Change | |
|
Higher
|
37%
|
45%
|
+37.8%
|
36%
|
39%
|
+13.4%
|
|
Same
|
48%
|
45%
|
NA
|
50%
|
47%
|
NA
|
|
Lower
|
15%
|
10%
|
-23.1%
|
14%
|
14%
|
-12.9%
|
|
Net Average
|
+10.3%
|
+14.7%
|
+10.8%
|
+3.3%
| ||
PREDICTED CAPITAL EXPENDITURES — 2015 vs. 2014
Manufacturing
Purchasing and supply executives expect capital expenditures to increase 3.7 percent in 2015. The 35 percent of respondents who predict increased capital expenditures in 2015 indicate an average increase of 26.6 percent, while the 21 percent who said their capital spending would be reduced predict an average decrease of 27.8 percent. Forty-four percent said they expect to spend the same in 2015 as in 2014. The 13 industries predicting increases in capital expenditures for 2015 — listed in order of percentage increase — are: Textile Mills; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Nonmetallic Mineral Products; Wood Products; Transportation Equipment; Plastics & Rubber Products; Printing & Related Support Activities; Chemical Products; Apparel, Leather & Allied Products; Miscellaneous Manufacturing; Primary Metals; and Paper Products.
Non-Manufacturing
Non-manufacturing purchasing and supply executives are expecting an increase of 3.8 percent in capital expenditures in 2015, more than the increase of 3.3 percent they are reporting for 2014. The 40 percent of respondents expecting to spend more on capital expenditures predict an average increase of 16.6 percent. An additional 17 percent anticipate a decrease averaging 15.8 percent. Forty-three percent expect to spend the same on capital expenditures in 2015 as in 2014. The 12 industries expecting increases in capital expenditures in 2015 — listed in order of percentage increase — are: Agriculture, Forestry, Fishing & Hunting; Real Estate, Rental & Leasing; Retail Trade; Mining; Professional, Scientific & Technical Services; Arts, Entertainment & Recreation; Public Administration; Transportation & Warehousing; Construction; Wholesale Trade; Information; and Health Care & Social Assistance.
Predicted Capital Expenditures 2015 vs. 2014
| |||||
|
Manufacturing
|
Non-Manufacturing
| ||||
|
Predicted
Dec 2014
|
Magnitude
of Change
|
Predicted
Dec 2014
|
Magnitudeof Change
| ||
|
Higher
|
35%
|
+26.6%
|
40%
|
+16.6%
| |
|
Same
|
44%
|
NA
|
43%
|
NA
| |
|
Lower
|
21%
|
-27.8%
|
17%
|
-15.8%
| |
|
Net Average
|
+3.7%
|
+3.8%
| |||
PRICES — Changes Between End of 2013 and End of 2014
Manufacturing
After an earlier forecast in April 2014 of a 1.5 percent increase in prices paid for 2014, survey respondents now report realized price increases averaging 1.4 percent for the year. The 50 percent who say their prices are higher now than at the end of 2013 report an average increase of 4.8 percent, while the 27 percent who report lower prices averaged a 3.7 percent decrease. The remaining 23 percent indicate no change between the end of 2013 and the end of 2014. The 13 industries experiencing price increases — listed in order — are: Wood Products; Nonmetallic Mineral Products; Food, Beverage & Tobacco Products; Paper Products; Primary Metals; Plastics & Rubber Products; Furniture & Related Products; Chemical Products; Miscellaneous Manufacturing; Transportation Equipment; Textile Mills; Fabricated Metal Products; and Machinery.
Manufacturing Price Changes Between End of 2013 and End of 2014
| ||||||
|
Predicted
Dec 2013 |
Magnitude
of Change |
Predicted
April 2014 |
Magnitude
of Change |
Reported
Dec 2014
|
Magnitudeof Change
| |
|
Higher
|
58%
|
+4.6%
|
48%
|
+4.7%
|
50%
|
+4.8%
|
|
Same
|
20%
|
NA
|
33%
|
NA
|
23%
|
NA
|
|
Lower
|
22%
|
-4.7%
|
19%
|
-3.7%
|
27%
|
-3.7%
|
|
Net Average
|
+1.6%
|
+1.5%
|
+1.4%
| |||
Non-Manufacturing
As 2014 draws to a close, non-manufacturing supply managers report prices they pay have increased by 1.7 percent over the entire year. This is less than the 2.2 percent increase they predicted in April 2014, and greater than the 1.3 percent increase reported one year ago for 2013. Fifty-three percent of purchasers report price increases averaging 4.4 percent. Thirteen percent of purchasers indicate decreased prices with an average reduction of 5.1 percent, and 34 percent of respondents have not experienced overall price changes this year. The 17 industries reporting price increases in 2014 — listed in order — are: Transportation & Warehousing; Professional, Scientific & Technical Services; Agriculture, Forestry, Fishing & Hunting; Information; Accommodation & Food Services; Construction; Educational Services; Real Estate, Rental & Leasing; Retail Trade; Other Services; Arts, Entertainment & Recreation; Health Care & Social Assistance; Finance & Insurance; Mining; Public Administration; Management of Companies & Support Services; and Wholesale Trade.
Non-Manufacturing Price Changes Between End of 2013 and End of 2014
| ||||||
|
Predicted
Dec 2013 |
Magnitudeof Change
|
Predicted
April 2014 |
Magnitude
of Change |
Reported
Dec 2014
|
Magnitudeof Change
| |
|
Higher
|
63%
|
+4.2%
|
61%
|
+4.1%
|
53%
|
+4.4%
|
|
Same
|
24%
|
NA
|
35%
|
NA
|
34%
|
NA
|
|
Lower
|
13%
|
-5.9%
|
4%
|
-6.3%
|
13%
|
-5.1%
|
|
Net Average
|
+1.9%
|
+2.2%
|
+1.7%
| |||
PRICES – Predicted Changes Between End of 2014 and April 2015
Manufacturing
Fifty percent of purchasing and supply managers expect the prices they pay to increase in early 2015 by an average of 3.6 percent. At the same time, 16 percent anticipate decreases averaging 3.6 percent. Including the 34 percent who expect no change in prices in the first four months of 2015, purchasers expect the net average overall price change to increase 1.2 percent for the first four months of 2015. The nine industries predicting increases in prices paid in the first part of 2015 higher than the 1.2 percent average — listed in order — are: Wood Products; Primary Metals; Nonmetallic Mineral Products; Printing & Related Support Activities; Miscellaneous Manufacturing; Fabricated Metal Products; Furniture & Related Products; Transportation Equipment; and Food, Beverage & Tobacco Products.
Non-Manufacturing
Non-manufacturing survey respondents predict their purchases in the first four months of 2015 will cost an average of 1.8 percent more than at the end of 2014. This is more than the 1.7 percent increase reported in the preceding section for all of 2014. Considering the prediction of a price change for all of 2015 (2.5 percent), purchasing and supply executives expect most of next year's price increases to occur in the first part of next year. Fifty-eight percent of non-manufacturing respondents predict the prices they pay will increase an average of 4.4 percent in the first part of 2015. Fourteen percent of respondents expect price decreases averaging 5.3 percent. The remaining 28 percent predict no change in prices in the first four months of 2015. The eight industries predicting greater than or equal to the 1.8 percent average increase in prices they expect to pay in the first part of 2015 — listed in order of percentage increase — are: Real Estate, Rental & Leasing; Mining; Professional, Scientific & Technical Services; Transportation & Warehousing; Educational Services; Accommodation & Food Services; Construction; and Arts, Entertainment & Recreation.
Prices – Predicted Changes Between End of 2014 and April 2015
| |||||
|
Manufacturing
|
Non-Manufacturing
| ||||
|
Predicted
Dec 2014
|
Magnitude of
Change |
Predicted
Dec 2014
|
Magnitudeof Change
| ||
|
Higher
|
50%
|
+3.6%
|
58%
|
+4.4%
| |
|
Same
|
34%
|
NA
|
28%
|
NA
| |
|
Lower
|
16%
|
-3.6%
|
14%
|
-5.3%
| |
|
Net Average
|
+1.2%
|
+1.8%
| |||
PRICES — Predicted Changes Between End of 2014 and End of 2015
Manufacturing
Respondents predict a net average increase in prices paid of 1.5 percent between December 2014 and December 2015, indicating they expect prices to increase an additional 0.3 percent during the period of May 2015 through December 2015. Fifty-nine percent of respondents expect an average price increase of 4 percent for the full year of 2015, while 18 percent expect an average reduction of 4.6 percent. The remaining 23 percent expect no change in their average prices paid for the year 2015. The eight industries expecting to receive increases above the predicted average of 1.5 percent by the end of 2015 — listed in order — are: Wood Products; Primary Metals; Fabricated Metal Products; Nonmetallic Mineral Products; Furniture & Related Products; Miscellaneous Manufacturing; Printing & Related Support Activities; and Textile Mills.
Non-Manufacturing
For all of 2015, non-manufacturing supply management executives expect their prices to increase an average of 2.5 percent. Sixty-three percent of respondents expect increases averaging 4.9 percent, 10 percent anticipate prices to drop an average of 5.5 percent, and 27 percent foresee no change in prices during the next year. The 10 industries expecting greater than the 2.5 percent average price increase by the end of 2015 — listed in order of percentage increase — are: Real Estate, Rental & Leasing; Mining; Professional, Scientific & Technical Services; Transportation & Warehousing; Educational Services; Construction; Accommodation & Food Services; Arts, Entertainment & Recreation; Information; and Wholesale Trade.
Predicted Price Changes Between End of 2014 and End of 2015
| |||||
|
Manufacturing
|
Non-Manufacturing
| ||||
|
Predicted
Dec 2014
|
Magnitude
of Change
|
Predicted
Dec 2014
|
Magnitude
of Change
| ||
|
Higher
|
59%
|
+4.0%
|
63%
|
+4.9%
| |
|
Same
|
23%
|
NA
|
27%
|
NA
| |
|
Lower
|
18%
|
-4.6%
|
10%
|
-5.5%
| |
|
Net Average
|
+1.5%
|
+2.5%
| |||
LABOR AND BENEFIT COSTS — Predicted Rate Change End of 2014 vs. End of 2015
Manufacturing
Purchasing and supply executives expect higher overall labor and benefit costs for 2015. Seventy-one percent of respondents expect increased labor and benefit costs and expect them to grow by an average of 4.6 percent for all of 2015, while the 2 percent forecasting lower costs see them decreasing by an average of 3.3 percent. Including the 27 percent of respondents who believe costs will remain the same, the overall net rate of increase is expected to be 3.2 percent between the end of 2014 and the end of 2015. The six industries expecting to pay an increase of 3.2 percent or higher — listed in order of percentage increase — are: Furniture & Related Products; Transportation Equipment; Fabricated Metal Products; Petroleum & Coal Products; Miscellaneous Manufacturing; and Printing & Related Support Activities.
Non-Manufacturing
Purchasing and supply executives expect a 2.1 percent increase in labor and benefit costs for non-manufacturing industries in 2015. Sixty-three percent of respondents expect such costs to increase by an average of 3.8 percent. Another 4 percent of respondents expect labor and benefit costs to shrink by an average of 7.2 percent, and 33 percent believe costs will remain stable during 2015. The eight industries expecting to pay an increase of 2.1 percent or higher — listed in order of percentage increase — are: Construction; Professional, Scientific & Technical Services; Retail Trade; Accommodation & Food Services; Mining; Arts, Entertainment & Recreation; Wholesale Trade; and Public Administration.
Labor and Benefit Costs — Predicted Rate Change End of 2015 vs. End of 2014
| ||||||
|
Manufacturing
|
Non-Manufacturing
| |||||
|
Predicted
for 2014
Dec 2013
|
Predicted
for 2015
Dec 2014
|
Magnitude
of Change
|
Predicted
for 2014
Dec 2013
|
Predicted
for 2015
Dec 2014
|
Magnitude
of Change
| |
|
Higher
|
68%
|
71%
|
+4.6%
|
62%
|
63%
|
+3.8%
|
|
Same
|
27%
|
27%
|
NA
|
34%
|
33%
|
NA
|
|
Lower
|
5%
|
2%
|
-3.3%
|
4%
|
4%
|
-7.2%
|
|
Net Average
|
+2.3%
|
+3.2%
|
+2.6%
|
+2.1%
| ||
EMPLOYMENT — Change in Overall Employment
Manufacturing
ISM's Manufacturing Business Survey Committee members report that manufacturing employment increased 1.2 percent since April 2014, and forecast that employment will increase, on average, 1.5 percent for the full year of 2015. Thirty-six percent of respondents expect employment to be 7.1 percent higher in 2015, while 15 percent predict employment to be lower by 6.7 percent. The remaining 49 percent of respondents expect their employment levels to be unchanged in 2015. The 13 industries predicting increases in employment in 2015 — listed in order — are: Printing & Related Support Activities; Textile Mills; Fabricated Metal Products; Furniture & Related Products; Apparel, Leather & Allied Products; Chemical Products; Electrical Equipment, Appliances & Components; Primary Metals; Machinery; Transportation Equipment; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; and Petroleum & Coal Products.
Non-Manufacturing
ISM's Non-Manufacturing Business Survey Committee members report that non-manufacturing employment has increased 1.3 percent since April 2014. Looking ahead to 2015, they forecast that employment will increase 1.7 percent by the end of 2015. For 2015, 38 percent of respondents expect higher levels of employment, 12 percent anticipate lower levels, and 50 percent expect their employment levels to be unchanged. The 13 industries anticipating increases in their employment in 2015 — listed in order — are: Accommodation & Food Services; Professional, Scientific & Technical Services; Public Administration; Retail Trade; Mining; Other Services; Construction; Management of Companies & Support Services; Health Care & Social Assistance; Wholesale Trade; Utilities; Finance & Insurance; and Educational Services.
Change in Overall Employment
| ||||||
|
Manufacturing
|
Non-Manufacturing
| |||||
|
Reported for 2014 (since April)
Dec 2014
|
Predicted for 2015
Dec 2014
|
Magnitude
of Change
|
Reported for 2014 (since April)
Dec 2014
|
Predicted for 2015
Dec 2014
|
Magnitude
of Change
| |
|
Higher
|
39%
|
36%
|
+7.1%
|
34%
|
38%
|
+6.7%
|
|
Same
|
38%
|
49%
|
NA
|
47%
|
50%
|
NA
|
|
Lower
|
23%
|
15%
|
-6.7%
|
19%
|
12%
|
-7.9%
|
|
Net Average
|
+1.2%
|
+1.5%
|
+1.3%
|
+1.7%
| ||
|
Diffusion Index
|
58.0%
|
60.5%
|
57.5%
|
63.0%
|
||
Note: A diffusion index above 50 percent would generally indicate an expectation of higher employment; below 50 percent, an expectation of lower employment.
EXPORT BUSINESS — Predicted Change for Next Half Year (First Half of 2015)
Manufacturing
The responses for this semiannual report indicate purchasers see increases in new export orders for the first half of 2015. This continues the trend reported in the most recent ISM New Export Orders Index data in the monthly Manufacturing ISM Report On Business®, which has shown export orders expanding for the last 24 months, from December 2012 through November 2014. Of the 80 percent of respondents who export, 53 percent predict an increase (49 percent moderate and 4 percent substantial) over the next half- year. Seven percent of respondents (7 percent moderate and 0 percent substantial) predict a decrease in their exports, and 40 percent anticipate no change in exports over the next half-year. The 13 industries expecting growth in exports during the first half of 2015 — listed in order — are: Apparel, Leather & Allied Products; Printing & Related Support Activities; Petroleum & Coal Products; Machinery; Computer & Electronic Products; Miscellaneous Manufacturing; Chemical Products; Plastics & Rubber Products; Fabricated Metal Products; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; Transportation Equipment; and Paper Products.
Non-Manufacturing
For the first half of 2015, non-manufacturing supply managers who report that their organizations engage in exporting are optimistic concerning their export business. Of the 29 percent of non-manufacturing business survey respondents who report that they export, 34 percent predict an increase (30 percent moderate and 4 percent substantial) over the next half year. Two percent of the respondents expect a decrease in their exports (2 percent moderate and 0 percent substantial), and 64 percent anticipate no change in exports over the next half year. Of the industries that report they export, the following eight industries expect growth in export business in the first half of 2015: Transportation & Warehousing; Professional, Scientific & Technical Services; Construction; Management of Companies & Support Services; Other Services; Wholesale Trade; Retail Trade; and Accommodation & Food Services.
Predicted Change in Export Business — Next Half Year
| ||||
|
Manufacturing
|
Non-Manufacturing
| |||
|
Predicted
For 2014 |
Predicted
For 2015 |
Predicted
For 2014 |
Predicted
For 2015 | |
|
First Half
of 2014
Predicted
Dec 2013
|
First Half
of 2015
Predicted
Dec 2014 |
First Half
of 2014
Predicted
Dec 2013
|
First Half
of 2015
Predicted
Dec 2014 | |
|
Substantial Increase
|
1%
|
4%
|
13%
|
4%
|
|
Moderate Increase
|
49%
|
49%
|
23%
|
30%
|
|
No Change
|
43%
|
40%
|
54%
|
64%
|
|
Moderate Decrease
|
7%
|
7%
|
10%
|
2%
|
|
Substantial Decrease
|
0%
|
0%
|
0%
|
0%
|
|
Diffusion Index
|
71.7%
|
72.6%
|
62.8%
|
66.0%
|
IMPORT BUSINESS — Predicted Change for Next Half Year (First Half of 2015)
Manufacturing
Purchasers expect increases in imports in the first half of 2015. Of the 84 percent of purchasers who reported they import, 41 percent predict an increase in their imports over the next half-year (38 percent moderate and 3 percent substantial), while 8 percent predict a decrease in imports of materials (7 percent moderate and 1 percent substantial). Fifty-one percent of survey respondents expect no change in imports in the first half of 2015. The 14 industries expecting growth in imports — listed in order — are: Printing & Related Support Activities; Electrical Equipment, Appliances & Components; Machinery; Computer & Electronic Products; Fabricated Metal Products; Chemical Products; Transportation Equipment; Nonmetallic Mineral Products; Petroleum & Coal Products; Plastics & Rubber Products; Food, Beverage & Tobacco Products; Paper Products; Furniture & Related Products; and Miscellaneous Manufacturing.
Non-Manufacturing
Non-manufacturers have higher expectations for the use of imports for the first half of 2015 than they did in December 2013 for the first half of 2014. Of the 42 percent of non-manufacturing organizations who reported they import, 38 percent (37 percent moderate and 1 percent substantial) predict an increase in their imports during the first half of 2015. Three percent of the respondents (3 percent moderate and 0 percent substantial) predict a decrease in imports of materials and services. The remaining 59 percent of purchasers expect no change in imports over the next half year. The eight industries expecting growth in imports — listed in order — are: Utilities; Information; Professional, Scientific & Technical Services; Retail Trade; Wholesale Trade; Construction; Management of Companies & Support Services; and Transportation & Warehousing.
Predicted Change in Import Business — Next Half Year
| ||||
|
Manufacturing
|
Non-Manufacturing
| |||
|
Predicted
For 2014 |
Predicted
For 2015 |
Predicted
For 2014 |
Predicted
For 2015 | |
|
First Half
of 2014
Predicted
Dec 2013
|
First Half
of 2015
Predicted
Dec 2014 |
First Half
of 2014
Predicted
Dec 2013
|
First Half
of 2015
Predicted
Dec 2014 | |
|
Substantial Increase
|
9%
|
3%
|
1%
|
1%
|
|
Moderate Increase
|
32%
|
38%
|
25%
|
37%
|
|
No Change
|
45%
|
51%
|
66%
|
59%
|
|
Moderate Decrease
|
12%
|
7%
|
7%
|
3%
|
|
Substantial Decrease
|
2%
|
1%
|
1%
|
0%
|
|
Diffusion Index
|
63.5%
|
66.1%
|
59.2%
|
67.6%
|
BUSINESS REVENUES
Business Revenues Comparison — 2014 vs. 2013
Manufacturing
Summarizing revenues for 2014, 62 percent of respondents say revenue was better than 2013, and that nominal (before adjusting for inflation) revenues increased an average of 9.1 percent over 2013. Conversely, 18 percent say their nominal revenues decreased in 2014 by an average of 10.8 percent, and the remaining 20 percent indicate no change. Overall, purchasing and supply executives indicate a net nominal increase of 3.6 percent in business revenues for 2014 over 2013. This is less than the 5.3 percent increase that was forecast in April 2014 for all of 2014, and also less than the 4.4 percent increase predicted in December 2013 for all of 2014. The 14 industries reporting increases (highest to lowest) in revenues in 2014 — listed in order — are: Printing & Related Support Activities; Furniture & Related Products; Primary Metals; Nonmetallic Mineral Products; Food, Beverage & Tobacco Products; Textile Mills; Fabricated Metal Products; Chemical Products; Computer & Electronic Products; Miscellaneous Manufacturing; Petroleum & Coal Products; Paper Products; Electrical Equipment, Appliances & Components; and Machinery.
Manufacturing Business Revenues — 2014 vs. 2013
| ||||||
|
Predicted
Dec 2013
|
Nominal
% Change
|
Predicted
April 2014
|
Nominal
% Change
|
Reported
Dec 2014
|
Nominal
% Change
| |
|
Higher
|
69%
|
+8.3%
|
68%
|
+9.1%
|
62%
|
+9.1%
|
|
Same
|
23%
|
NA
|
23%
|
NA
|
20%
|
NA
|
|
Lower
|
8%
|
-15.7%
|
9%
|
-9.6%
|
18%
|
-10.8%
|
|
Net Average
|
+4.4%
|
+5.3%
|
+3.6%
| |||
Non-Manufacturing
Non-manufacturing supply management executives report that business revenues for 2014 have increased over 2013 by 5.1 percent. This is more than the 2.7 percent increase predicted in April 2014 for all of 2014. The 57 percent of respondents reporting better business in 2014 than in 2013 estimate an average nominal (before adjusting for inflation) revenue increase of 11.3 percent. This is in contrast to an average nominal decrease of 9.8 percent reported by the 13 percent of respondents who indicate worse business in 2014. The remaining 30 percent have experienced no change in 2014 from 2013. The 15 industries reporting increases in revenues in 2014 — listed in order — are: Professional, Scientific & Technical Services; Mining; Construction; Accommodation & Food Services; Retail Trade; Information; Agriculture, Forestry, Fishing & Hunting; Wholesale Trade; Utilities; Health Care & Social Assistance; Public Administration; Finance & Insurance; Educational Services; Real Estate, Rental & Leasing; and Other Services.
Non-Manufacturing Business Revenues — 2014 vs. 2013
| ||||||
|
Predicted
Dec 2013
|
Nominal
% Change
|
Predicted
April 2014
|
Nominal
% Change
|
Reported
Dec 2014
|
Nominal
% Change
| |
|
Higher
|
58%
|
+8.7%
|
51%
|
+6.7%
|
57%
|
+11.3%
|
|
Same
|
32%
|
NA
|
41%
|
NA
|
30%
|
NA
|
|
Lower
|
10%
|
-13.9%
|
8%
|
-9.3%
|
13%
|
-9.8%
|
|
Net Average
|
+3.6%
|
+2.7%
|
+5.1%
| |||
Business Revenues Prediction for 2015
Manufacturing
Manufacturing survey respondents forecast that business revenues for 2015 will be stronger than in 2014. The 67 percent of respondents forecasting better business revenues in 2015 than in 2014 estimate an average nominal (before adjusting for inflation) increase of 9.5 percent in their organizations' revenues. This is in contrast to an average nominal decrease of 9 percent forecast by the 7 percent who predict worse business revenues in 2015. Including the 26 percent who see no change in 2015, the forecast for overall net nominal increase in business revenues for 2015 over 2014 is 5.6 percent. The 15 manufacturing industries expecting revenue improvement over 2014 — listed in order — are: Food, Beverage & Tobacco Products; Furniture & Related Products; Computer & Electronic Products; Fabricated Metal Products; Miscellaneous Manufacturing; Machinery; Nonmetallic Mineral Products; Printing & Related Support Activities; Paper Products; Chemical Products; Transportation Equipment; Textile Mills; Primary Metals; Plastics & Rubber Products; and Electrical Equipment, Appliances & Components.
Non-Manufacturing
Non-manufacturing survey respondents forecast that business revenues for 2015 will be improved over 2014 by an average of 10 percent. This is greater than the 5.1 percent increase reported for 2014, and also greater than the 4 percent increase reported one year ago for 2013 revenues over 2012 revenues. The 62 percent of respondents forecasting better business in 2015 than in 2014 estimate an average nominal (before adjusting for inflation) revenue increase of 17.7 percent. This is in contrast to an average nominal decrease of 12.3 percent forecast by the 8 percent who predict worse business in 2015. The remaining 30 percent see no change in 2015. The 15 industries expecting increases in revenues in 2015 — listed in order of percentage increase — are: Wholesale Trade; Professional, Scientific & Technical Services; Transportation & Warehousing; Construction; Other Services; Mining; Retail Trade; Accommodation & Food Services; Arts, Entertainment & Recreation; Public Administration; Real Estate, Rental & Leasing; Utilities; Health Care & Social Assistance; Finance & Insurance; and Information.
Business Revenues — 2015 vs. 2014
| |||||
|
Manufacturing
|
Non-Manufacturing
| ||||
|
Predicted
Dec 2014
|
Nominal
% Change
|
Predicted
Dec 2014
|
Nominal
% Change
| ||
|
Higher
|
67%
|
+9.5%
|
62%
|
+17.7%
| |
|
Same
|
26%
|
NA
|
30%
|
NA
| |
|
Lower
|
7%
|
-9.0%
|
8%
|
-12.3%
| |
|
Net Average
|
+5.6%
|
+10.0%
| |||
PROFIT MARGINS
Manufacturing
Survey respondents report that profit margins increased on average during the second and third quarters of 2014, as 38 percent experienced an increase in profit margins, 24 percent had lower margins, and 38 percent reported no change. Overall, expectations are notably higher between now and April 2015 as 46 percent of respondents forecast better profit margins, 12 percent predict lower profit margins, and 42 percent predict no change.
Non-Manufacturing
Non-manufacturing supply management executives were asked about changes in profit margins their organizations recently experienced and are expecting in the near future. Their responses indicate that 28 percent experienced an increase in profit margins during the second and third quarters of 2014, while 23 percent found smaller profit margins, and 49 percent had no change in margins during the same period. Looking ahead from now through April 2015, 32 percent of supply managers expect improved profit margins, 12 percent expect lower profit margins, and the remaining 56 percent of respondents anticipate no change in their profit margins.
Profit Margins
| ||||
|
Manufacturing
|
Non-Manufacturing
| |||
|
Apr 2014 through
Nov 2014
Reported Dec 2014
|
Nov 2014 through
Apr 2015
Predicted Dec 2014
|
Apr 2014 through
Nov 2014
Reported Dec 2014
|
Nov 2014 through
Apr 2015
Predicted Dec 2014
| |
|
Better
|
38%
|
46%
|
28%
|
32%
|
|
Same
|
38%
|
42%
|
49%
|
56%
|
|
Worse
|
24%
|
12%
|
23%
|
12%
|
|
Diffusion Index
|
57.0%
|
67.0%
|
52.5%
|
60.0%
|
BUSINESS COMPARISON
The First Half of 2015 Compared with Last Half of 2014
Manufacturing
Looking ahead to the first half of 2015, survey respondents are optimistic about the next half year as reflected in a diffusion index of 69.5 percent. Comparing their outlook for the first half of 2015 to the last half of 2014, 48 percent predict it will be better, 9 percent predict it will be worse, and 43 percent expect no change. The 15 industries expecting improvement in the first half of 2015 — listed in order — are: Printing & Related Support Activities; Textile Mills; Wood Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Primary Metals; Fabricated Metal Products; Chemical Products; Machinery; Furniture & Related Products; Transportation Equipment; Paper Products; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; and Computer & Electronic Products.
Non-Manufacturing
The first half of 2015 is predicted to be better than the last half of 2014, according to non-manufacturing purchasing and supply managers. The diffusion index indicating current expectations is 71 percent. Fifty percent of respondents expect the first half of next year to be better than the last half of this year, 8 percent anticipate it will be worse, and 42 percent predict no change. The 16 industries expecting improvement in the first half of 2015 — listed in order — are: Real Estate, Rental & Leasing; Other Services; Transportation & Warehousing; Construction; Health Care & Social Assistance; Finance & Insurance; Accommodation & Food Services; Mining; Professional, Scientific & Technical Services; Wholesale Trade; Public Administration; Management of Companies & Support Services; Agriculture, Forestry, Fishing & Hunting; Retail Trade; Educational Services; and Utilities.
Business — First Half 2015 vs. Last Half 2014
| ||
|
Manufacturing
|
Non-Manufacturing
| |
|
Predicted
Dec 2014
|
Predicted
Dec 2014
| |
|
Better
|
48%
|
50%
|
|
Same
|
43%
|
42%
|
|
Worse
|
9%
|
8%
|
|
Diffusion Index
|
69.5%
|
71.0%
|
Note: A diffusion index above 50 percent would generally indicate an expectation of the first half of the coming year being better than the second half of the current year.
The Second Half of 2015 Compared with the First Half of 2015
Manufacturing
Purchasing and supply executives are similarly optimistic about the second half of 2015 compared to the first half of 2015. The percentage of survey respondents who forecast the second half of 2015 to be better than the first half is 44 percent, while 10 percent expect it to be worse, and 46 percent expect no change. The diffusion index for the second half of 2015 is 67 percent, compared to 69.5 percent for the first half of 2015. The 15 industries predicting improvement in the second half of 2015 — listed in order — are: Printing & Related Support Activities; Textile Mills; Petroleum & Coal Products; Primary Metals; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Machinery; Paper Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Nonmetallic Mineral Products; Chemical Products; Computer & Electronic Products; Furniture & Related Products; and Transportation Equipment.
Non-Manufacturing
Comparing the second half of 2015 to the first half, non-manufacturing purchasing and supply executives feel the same as they do for the first half of the year compared to the last half of 2014 (diffusion index for the second half and the first half is the same at 71 percent). The percentage of respondents who currently forecast the second half of 2015 to be better than the first half is 47 percent, while 5 percent expect it to be worse. An additional 48 percent of purchasers expect no change. The 16 industries expecting improvement in the second half of the year — listed in order — are: Construction; Arts, Entertainment & Recreation; Transportation & Warehousing; Real Estate, Rental & Leasing; Information; Utilities; Finance & Insurance; Professional, Scientific & Technical Services; Mining; Retail Trade; Health Care & Social Assistance; Wholesale Trade; Management of Companies & Support Services; Agriculture, Forestry, Fishing & Hunting; Public Administration; and Accommodation & Food Services.
Business — Second Half 2015 vs. First Half 2015
| ||
|
Manufacturing
|
Non-Manufacturing
| |
|
Predicted
Dec 2014
|
Predicted
Dec 2014
| |
|
Better
|
44%
|
47%
|
|
Same
|
46%
|
48%
|
|
Worse
|
10%
|
5%
|
|
Diffusion Index
|
67.0%
|
71.0%
|
Note: A diffusion index above 50 percent would generally indicate an expectation of the second half of the coming year being better than the first half.
SPECIAL QUESTION TOPIC: EXPERIENCE WITH LEVEL OF UNFILLED JOBS IN 2014
Manufacturing
In response to a special question regarding which of the following best characterizes the organizations that have reported having more unfilled job openings than usual in 2014, Manufacturing respondents indicated the following:
Currently have a typical number of unfilled job openings (39.5%)
Cannot find enough qualified applicants to fill job openings (28.8%)
Hiring less than usual due to economic uncertainty (18.6%)
Hiring less than usual because using temporary workers (9%)
Hiring less than usual because wages/benefits or training costs are too high (1.7%)
Applicants have not accepted our job offers (0.6%)
Other (1.7%)
Non-Manufacturing
In response to a special question regarding which of the following best characterizes the organizations that have reported having more unfilled job openings than usual in 2014, Non-Manufacturing respondents indicated the following:
Currently have a typical number of unfilled job openings (46.5%)
Cannot find enough qualified applicants to fill job openings (19.1%)
Hiring less than usual due to economic uncertainty (15.9%)
Hiring less than usual because wages/benefits or training costs are too high (6.4%)
Hiring less than usual because using temporary workers (5.1%)
Applicants have not accepted our job offers (3.2%)
Other (3.8%)
SPECIAL QUESTION TOPIC: RE-SHORING MANUFACTURING/BUSINESS PROCESSES IN 2015
Manufacturing
We asked a second special question as to whether organizations plan on re-shoring significant volumes of manufacturing/business processes in 2015. For Manufacturing, 10.4 percent responded "Yes," 58.8 percent responded "No," and 30.8 percent responded "Not Applicable."
For those organizations that responded "No," their responses to the one main reason for not re-shoring in 2015 break down as follows:
Cost advantage of off-shoring still too favorable (53.7%)
Shortage of usable plant/asset capacity in the US (6.5%)
Shortage of applicable labor in the US (1.9%)
Cost of transition too high (12%)
Political commitment to the host country (3.7%)
Other (22.2%)
Non-Manufacturing
We asked a second special question as to whether organizations plan on re-shoring significant volumes of manufacturing/business processes in 2015. For Non-Manufacturing, 8.1 percent responded "Yes," 36 percent responded "No," and 55.9 percent responded "Not Applicable."
For those organizations that responded "No," their responses to the one main reason for not re-shoring in 2015 break down as follows:
Cost advantage of off-shoring still too favorable (52.1%)
Shortage of usable plant/asset capacity in the US (6.3%)
Shortage of applicable labor in the US (2.1%)
Cost of transition too high (10.4%)
Political commitment to the host country (12.5%)
Other (16.7%)
INVENTORY-TO-SALES RATIO
Manufacturing
Of the 96 percent of manufacturing purchasers who answered this question, 19 percent anticipate increasing their purchased inventory-to-sales ratio during 2015. An additional 21 percent expect their ratio to drop, and 60 percent see no change. The diffusion index of 49 percent suggests the inventory-to-sales ratio may drop slightly in 2015.
Non-Manufacturing
Of the 75 percent of non-manufacturing purchasers who answered this question, 8 percent anticipate increasing their purchased inventory-to-sales ratio during 2015. An additional 7 percent expect their ratio to drop, and 85 percent see no change. The diffusion index of 50.5 percent suggests the inventory-to-sales ratio will grow slightly in 2015.
Predicted Change in Purchased Inventory-to-Sales Ratio
| ||||
|
Manufacturing
|
Non-Manufacturing
| |||
|
For 2014
Predicted
Dec 2013
|
For 2015
Predicted
Dec 2014
|
For 2014
Predicted
Dec 2013
|
For 2015
Predicted
Dec 2014
| |
|
Greater
|
22%
|
19%
|
14%
|
8%
|
|
Same
|
62%
|
60%
|
78%
|
85%
|
|
Smaller
|
16%
|
21%
|
8%
|
7%
|
|
Diffusion Index
|
53.0%
|
49.0%
|
53.0%
|
50.5%
|
Note: A diffusion index above 50 percent would indicate an increase in the inventory-to-sales ratio; below 50 percent, a decrease in the ratio.
OUTLOOK FOR THE NEXT 12 MONTHS
Manufacturing
Compared to the outlook for 2014 reported in December of 2013, survey respondents this year are more optimistic about the outlook for 2015. Fifty-eight percent of respondents believe 2015 will be better than 2014. Only 35 percent of respondents believe 2015 will be the same as 2014 and just 7 percent believe 2015 will be worse. The resulting diffusion index for the outlook for 2015 is 75.5 percent, compared with 65.5 percent from one year ago, when looking forward to 2014.
Non-Manufacturing
Non-manufacturing survey respondents are overall more optimistic on their outlook now as compared to when they looked ahead in December 2013. Because a larger proportion of respondents this year believe 2015 will be the same as 2014 and a smaller proportion of respondents believe 2015 will be worse than 2014, the diffusion index looking forward into 2015 is slightly higher than the diffusion index looking forward into 2014.
Outlook — Next 12 Months
| ||||
|
Manufacturing
|
Non-Manufacturing
| |||
|
Predicted
for 2014 Dec 2013 |
Predicted
for 2015 Dec 2014 |
Predicted
for 2014 Dec 2013 |
Predicted
for 2015 Dec 2014 | |
|
Better
|
44%
|
58%
|
56%
|
54%
|
|
Same
|
43%
|
35%
|
28%
|
35%
|
|
Worse
|
13%
|
7%
|
16%
|
11%
|
|
Diffusion Index
|
65.5%
|
75.5%
|
70.0%
|
71.5%
|
U.S. DOLLAR — Predicted Strength vs. Major Trading Currencies — in 2015 — Manufacturing Only
Manufacturing
Purchasing and supply executives are expecting the U.S. dollar will strengthen in 2015 against the foreign currencies listed below. The average diffusion index for this forecast is 67.7 percent, an increase of 15.6 percent over the December 2013 forecast average of 52.1 percent.
U.S. Dollar Will Be:
|
Euro
|
Canada
$ |
British
Pound
|
Japanese
Yen
|
Mexican
Peso
|
Korean
Won |
Taiwan
$
|
|
Stronger than
|
58%
|
51%
|
50%
|
52%
|
59%
|
42%
|
40%
|
|
Same as
|
21%
|
40%
|
38%
|
33%
|
27%
|
38%
|
45%
|
|
Weaker than
|
21%
|
9%
|
12%
|
15%
|
14%
|
20%
|
15%
|
|
Diffusion Index
|
68.6%
|
71.0%
|
69.2%
|
68.7%
|
72.9%
|
60.8%
|
62.8%
|
Note: A diffusion index above 50 percent would predict a generally stronger U.S. dollar; below 50 percent, a generally weaker U.S. dollar, with the distance from 50 percent indicative of the predicted strength or weakness.
SUMMARY
Manufacturing
The manufacturing sector is currently expanding, and the forecast indicates that it will continue to expand in the first half of 2015, and expand at about the same rate in the second half of 2015.
Operating rate is currently at 83.7 percent.
Production capacity increased by 5.3 percent in 2014.
Production capacity is expected to increase by 5.6 percent in 2015.
Capital expenditures increased 14.7 percent in 2014.
Capital expenditures are expected to increase 3.7 percent in 2015.
Prices paid increased 1.4 percent in 2014.
Overall 2015 prices paid are expected to increase 1.5 percent.
Labor and benefit costs are expected to increase 3.2 percent in 2015.
Manufacturing employment is expected to increase 1.5 percent in 2015.
Expect growth in U.S. exports in 2015.
Expect growth in U.S. imports in 2015.
Manufacturing revenues (nominal) are up 3.6 percent in 2014.
Manufacturing revenues (nominal) are expected to increase 5.6 percent in 2015.v The U.S. dollar is expected to strengthen versus all major trading partner currencies in 2015.
Overall attitude of manufacturing supply managers: optimistic outlook, with 93 percent of respondents predicting 2015 will be the same as or better than 2014.
Non-Manufacturing
The non-manufacturing sector continues to expand, and the forecast indicates an increased rate of expansion in 2015.
Operating rate is currently at 87.6 percent.
Production capacity increased 3.6 percent in 2014.
Production and provision capacity is expected to increase 4.3 percent in 2015.
Capital expenditures increased 3.3 percent in 2014.
Capital expenditures are expected to increase 3.8 percent in 2015.
Prices paid increased 1.7 percent in 2014.
Prices paid are expected to increase 2.5 percent in 2015.
Labor and benefit costs are expected to increase 2.1 percent in 2015.
Non-manufacturing employment is expected to increase 1.7 percent in 2015.
Expect export levels to increase in 2015.
Expect import growth in 2015.
Non-manufacturing revenues (nominal) are up 5.1 percent in 2014.
Non-manufacturing revenues (nominal) are expected to rise 10 percent in 2015.
Overall attitude of non-manufacturing supply managers: mostly positive outlook, with 89 percent of respondents predicting 2015 will be the same as or better than 2014.
*Miscellaneous Manufacturing includes items such as medical equipment and supplies, jewelry, sporting goods, toys and office supplies.
**Other Services include services such as equipment and machinery repairing; promoting or administering religious activities; grant making; advocacy; and providing dry-cleaning and 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 and is considered by many economists to be the most reliable near-term economic barometer available. It is reviewed regularly by government agencies and economic business leaders. The report, compiled from responses to questions asked of purchasing and supply executives across the country, tracks industrial production, new orders, inventories, supplier deliveries, imports, exports, backlog of orders, employment, customers' inventories, buying policies and prices. The report has been issued by the association since 1931, except during World War II.
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 across the country. The report covers business activity, new orders, backlog of orders, new export orders, inventory change, inventory sentiment, imports, prices, employment, and supplier deliveries.
The industries reporting growth, as indicated in the Manufacturing and Non-Manufacturing ISM® Report On Business® monthly reports, and in this semiannual forecast, are listed in the order of most growth to least growth. For the industries reporting contraction or decreases, those are listed in the order of the highest level of contraction/decrease to the least level of contraction/decrease.
The Manufacturing and Non-Manufacturing ISM® Report On Business® is published monthly by the Institute for Supply Management®, the first supply institute in the world. Founded in 1915, ISM's mission is to enhance the value and performance of procurement and supply chain management practitioners and their organizations worldwide. By executing and extending its mission through education, research, standards of excellence and information dissemination — including the renowned monthly ISM® Report On Business® — ISM maintains a strong global influence among individuals and organizations. ISM is a not-for-profit educational association that serves professionals with an interest in supply management who live and work in more than 80 countries. ISM offers the Certified Professional in Supply Management® (CPSM®) and Certified Professional in Supplier Diversity® (CPSD®) qualifications.
The full text version of each report is posted on ISM's Home Page at www.ism.ws 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 December 2014 data will be released at 10:00 a.m. (ET) on Friday, January 2, 2015.
The next Non-Manufacturing ISM Report On Business® featuring the December 2014 data will be released at 10:00 a.m. (ET) on Tuesday, January 6, 2015.
Contact: Kathleen Lacy/ Report On Business® Analyst/ ISM®, ROB/Research/ Tempe, Arizona/ (800) 888-6276, ext. 3143/ email: klacy@ism.ws
SOURCE Institute for Supply Management through PRNewswire by press release ©
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