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ISM Releases Semiannual Economic Forecast

Tempe, Arizona— Economic improvement in the United States will continue in 2022, say the nation’s purchasing and supply management executives in the December 2021 Semiannual Economic Forecast. This expansion will continue a growth trend that began in June 2020, as indicated in the monthly ISM® Report on Business®. Revenues are expected to increase in 15 of 18 manufacturing industries and 17 of 18 services-sector industries. Capital expenditures are expected to increase by 7.7 percent in the manufacturing sector (after a 12.1-percent increase in 2021) and increase by 10.3 percent in the services sector. The manufacturing employment base is expected to grow by 1 percent following an increase of 3.3 percent in 2021. Compared to the first half (H1), growth in the second half (H2) of the year is projected to cool slightly in manufacturing and accelerate in services.

Manufacturing Summary


Expectations for 2022 are positive, as 65 percent of survey respondents expect revenues to be greater in 2022 than in 2021. The panel of purchasing and supply executives expects a 6.5-percent net increase in overall revenues for 2022, compared to a 14.1-percent increase reported for 2021. Fifteen of the 18 manufacturing industries expect revenue improvement in 2022, listed in order of largest to smallest projected increase: Apparel, Leather & Allied Products; Machinery; Computer & Electronic Products; Fabricated Metal Products; Transportation Equipment; Primary Metals; Miscellaneous Manufacturing; Chemical Products; Furniture & Related Products; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; Petroleum & Coal Products; Printing & Related Support Activities; Nonmetallic Mineral Products; and Paper Products.

“Manufacturing’s purchasing and supply executives expect to see strong growth in 2022. They are optimistic about overall business prospects for the first half of 2022, with business continuing to expand through the second half, though at slightly lower rates. Manufacturing experienced 18 consecutive months of growth from June 2020 through November 2021, with the composite PMI® registering above 60 in nine of the last 12 months of that time frame. Respondents expect raw materials pricing pressure to increase in 2022, as well as improved profit margins over H2 2021. Wages and employment will continue high rates of growth as hiring slows. Manufacturers also predict growth in both exports and imports in 2022,” says Fiore.

In the manufacturing sector, respondents report operating at 88.7 percent of their normal capacity, up 0.4 percentage point from the 88.3 percent reported in May 2021. Purchasing and supply executives predict that capital expenditures will increase by 7.7 percent in 2022 over 2021, compared to the 12.1-percent increase reported for 2021 over 2020. Manufacturers expect employment in the sector to grow by 1 percent in 2022 relative to December 2021 levels, while labor and benefit costs are expected to increase an average of 4.7 percent. Respondents also expect the U.S. dollar to weaken against six of the seven currencies of major trading partners in 2022; it is expected to strengthen relative to the Mexican peso.

The panel predicts that prices paid for raw materials will increase 8.2 percent during the first five months of the year, with an overall increase of 8.1 percent for 2022. This compares to a reported 14.5 percent increase in raw materials prices between the end of 2020 and November of 2021.

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