TEMPE, AZ – Economic growth in the US will continue in 2011, says ISM. Expectations are for a continuation of the economic recovery that began in mid-2009.

The manufacturing sector continues to outpace the non-manufacturing sector and has greater expectations for growth in terms of revenue, the firm says.

The manufacturing sector expects revenues to increase in 16 of 18 industries, while the non-manufacturing sector appears slightly less positive about the year ahead, with 12 of 18 industries expecting higher revenues.

Sixty-five percent of survey respondents expect revenues to be greater in 2011 than in 2010. The panel of purchasing and supply executives expects a 5.6% net increase in overall revenues for 2011, compared to a 7.9% increase reported for 2010.

The 16 manufacturing industries expecting improvement over 2010 – listed in order – are primary metals; fabricated metal products; petroleum and coal products; apparel, leather and allied products; transportation equipment; miscellaneous manufacturing; furniture and related products; plastics and rubber products; machinery; textile mills; wood products; electrical equipment, appliances and components; food, beverage and tobacco products; printing and related support activities; chemical products, and paper products.

Business investment will increase substantially in the manufacturing sector, while investment in the non-manufacturing sector will increase at a lower level.
In the manufacturing sector, respondents report operating at 80.2% of normal capacity, up from 72.8% reported in April 2010.

Purchasing and supply executives predict capital expenditures will increase 14.5% in 2011, compared to a 5.9% increase reported for 2010.

Survey respondents also forecast they will reduce inventories in an effort to improve their purchased inventory-to-sales ratio in 2011.

Manufacturers expect employment to increase 1.8 %, while labor and benefits costs are expected to increase an average of 1.9% in 2011.

Manufacturing purchasers are predicting strength in exports and imports in 2011. They also expect the US dollar to weaken on average against the currencies of major trading partners.

The panel also predicts prices will increase 2.7% during the first four months of 2011, and will increase an additional 1.3% during the balance of the year, with an overall increase of 4% for the year.

Survey respondents expect to realize supply chain improvements through improved inventory/asset management; cost reduction; supplier development/better metrics; supplier consolidation, and better risk management.

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