Economic recovery in 2010: ISM

Global - Economic growth in the US will resume in 2010, say a recent forecast by the Business Survey Committee of the Institute for Supply Management (ISM).

The overall forecast projects optimism about the US economy next year, with the manufacturing sector expected to experience the same positive conditions as the second half of 2009.

The nation's purchasing and supply management executives in their December 2009 Semi-annual Economic Forecast predicts revenues to increase in 13 manufacturing industries.

The 13 manufacturing industries expected to see improvement are: Transportation Equipment; Non-metallic Mineral Products; Printing & Related Support Activities; Computer & Electronic Products; Paper Products; Electrical Equipment, Appliances & Components; Apparel, Leather & Allied Products; Food, Beverage & Tobacco Products; Chemical Products; Machinery; Miscellaneous Manufacturing (a); Textile Mills; and Fabricated Metal Products.

According to the study, 60% of survey respondents expect revenues to be increase next year by 5.7% net increase in overall revenues for 2010, compared to a 10.7% decrease reported for 2009.

"Manufacturing purchasing and supply executives reflect more of their typical optimism about their organisations' prospects as they consider the first half of 2010,and they are even more positive about the second half," said Norbert J. Ore, chairman of the ISM Manufacturing Business Survey Committee.

Ore continued "While 2009 has been a challenging year overall, we are in a growth trend as we approach the end of the year. Respondents expect cost pressures to be low to moderate based on their price forecast. Manufacturing growth is now in its fourth consecutive month as measured by and reported in the monthly Manufacturing ISM Report On Business®."

Survey respondents report currently operating at 70.1% of their normal capacity, up from 67% reported in April 2009. Purchasing and supply executives predict capital expenditures to shrink by 4% in 2010, compared to a 7.8% decline reported this year.

Major concerns are in the manufacturing sector are weak economy, credit crisis, taxes, interest rates, and high energy costs, finds the survey.

Respondents could reduce inventory levels in an effort to improve their purchased inventory-to-sales ratio next year.

Respondents also expect to realise supply chain improvements through supplier consolidation; new or improved enterprise technology and system utilisation; improved inventory/asset management; lean manufacturing; and cost reduction.

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