The U.S. economy will be mostly flat for the rest of 2025, say the nation’s purchasing and supply executives in the Spring 2025 ISM Supply Chain Planning Forecast (formerly known as the Spring ISM Semiannual Economic Forecast).
Expectations for the remainder of 2025 are lower than those expressed in December 2024. Trade issues, continued inflation concerns, and geopolitical uncertainty are all headwinds for the rest of the year.
These projections are part of the forecast issued by Institute for Supply Management® (ISM®) Business Survey panelists. The forecast was presented today by Timothy R. Fiore, CPSM, C.P.M., Chair of the ISM Manufacturing Business Survey Committee, and Steve Miller, CPSM, CSCP, Chair of the ISM Services Business Survey Committee.
Manufacturing Summary
Revenue for 2025 is expected to increase, on average, by 0.1 percent. This is 4.1 percentage points lower than the December 2024 forecast of 4.2 percent, and 0.7 percentage point lower than the 0.8-percentage point year-over-year increase reported for 2024. Thirty-four percent of respondents say that revenues for 2025 will increase, on average, 9.7 percent compared to 2024. Twenty-two percent say revenues will decrease (14.1 percent, on average), and 44 percent indicate no change. With an operating rate of 79.2 percent, a projected 1.3-percent decrease in capital expenditures, a 7.5-percent increase in prices paid for raw materials and a slight (0.1 percent) decrease in employment expected by the end of 2025, the manufacturing sector will, at best, grow very slightly. “With eight manufacturing industries expecting revenue growth in 2025 and eight industries expecting employment growth in 2025, panelists forecast a flat rest of the year. Sentiment in each industry was generally consistent with performance reports in the April 2025 Manufacturing ISM® Report On Business®, as well as the fall ISM Supply Chain Planning Forecast conducted in December,” says Fiore.
The eight of 18 industries that report projected revenue increases for the rest of 2025, listed in order — are: Primary Metals; Miscellaneous Manufacturing; Computer & Electronic Products; Chemical Products; Electrical Equipment, Appliances & Components; Printing & Related Support Activities; Food, Beverage & Tobacco Products; and Transportation Equipment.
Services Summary
Respondents expect no change in overall revenues in 2025, which is 3.9 percentage points lower than the 3.9-percent increase forecast in December 2024. Thirty-three percent of respondents say that revenues for 2025 will increase, on average, 9 percent compared to 2024. Meanwhile, 18 percent expect their revenues to decrease (16.6 percent, on average), and 49 percent indicate no change. “The services sector will be flat for the rest of 2025. Services companies are currently operating at 86.5 percent of normal capacity. Supply managers indicate that prices are expected to increase 7.3 percent over the year, reflecting increasing inflation. Employment is projected to decrease 1.6 percent. Nine industries forecast increased revenues, down from the 17 industries that predicted increases in December 2024,” says Miller.
Nine of 18 services industries project revenue increases in 2025, listed in order: Accommodation & Food Services; Arts, Entertainment & Recreation; Finance & Insurance; Information; Wholesale Trade; Transportation & Warehousing; Health Care & Social Assistance; Professional, Scientific & Technical Services; and Utilities.
OPERATING RATE
Manufacturing
Purchasing and supply executives report that their companies are operating, on average, at 79.2 percent of normal capacity, 3.1 percentage points lower than the figure reported in December 2024. The 10 industries reporting operating capacity levels above the average rate of 79.2 percent — listed in order — are: Petroleum & Coal Products; Apparel, Leather & Allied Products; Paper Products; Printing & Related Support Activities; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Wood Products; Chemical Products; Transportation Equipment; and Computer & Electronic Products.
Services
Organizations are operating, on average, at 86.5 percent of normal capacity, according to Business Survey panelists. This is 0.9 percentage point lower compared to December 2024. The nine industries operating at capacity levels above the average rate of 86.5 percent — listed in order — are: Retail Trade; Utilities; Educational Services; Other Services; Finance & Insurance; Information; Mining; Construction; and Real Estate, Rental & Leasing.
| Operating Rate | ||||||
|---|---|---|---|---|---|---|
| Manufacturing | Services | |||||
| May 2024 | Dec 2024 | May 2025 | May 2024 | Dec 2024 | May 2025 | |
| 90%+ | 40% | 40% | 37% | 54% | 55% | 49% |
| 50% – 89% | 57% | 57% | 55% | 45% | 43% | 48% |
| Below 50% | 3% | 3% | 8% | 1% | 2% | 3% |
| Overall Average | 82.8% | 82.3% | 79.2% | 88.6% | 87.4% | 86.5% |
PRODUCTION CAPACITY
Manufacturing
Production capacity is expected to increase 1.8 percent in 2025. In December, panelists reported an increase of 1.7 percentage points for 2024 and projected an increase of 4 percent this year. Twenty-seven percent of respondents expect capacity increases of, on average, 15.6 percent; 17 percent expect decreases of, on average, 14.6 percent; and 56 percent expect no change. The 13 industries expecting production capacity increases for 2025 — listed in order — are: Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Computer & Electronic Products; Nonmetallic Mineral Products; Plastics & Rubber Products; Primary Metals; Fabricated Metal Products; Paper Products; Miscellaneous Manufacturing; Chemical Products; Machinery; and Transportation Equipment.
| Manufacturing Production Capacity | ||||||
|---|---|---|---|---|---|---|
| For 2024 | For 2025 | For 2025 | ||||
| Reported Dec 2024 | Magnitude of Change | Predicted Dec 2024 | Magnitude of Change | Predicted May 2025 | Magnitude of Change | |
| Higher | 28% | +10.6% | 46% | +9.7% | 27% | +15.6% |
| Same | 60% | NA | 50% | NA | 56% | NA |
| Lower | 12% | -9.7% | 4% | -8.5% | 17% | -14.6% |
| Net Average | +1.7% | +4.0% | +1.8% | |||
Services
The capacity to produce products or provide services in the services sector is expected to decrease 1.1 percent in 2025. This compares to an increase of 3.2 percent reported for 2024 and a December projection of a 2.8-percent increase for this year. Eighteen percent of services respondents expect their capacity for 2025 to increase, on average, 10 percent, and 12 percent foresee capacity decreasing, on average, 24.7 percent. Seventy percent expect no change in capacity. The 11 industries expecting production capacity increases for 2025 — listed in order — are: Arts, Entertainment & Recreation; Accommodation & Food Services; Information; Professional, Scientific & Technical Services; Mining; Utilities; Construction; Wholesale Trade; Real Estate, Rental & Leasing; Finance & Insurance; and Health Care & Social Assistance.
| Services Production or Provision Capacity | ||||||
|---|---|---|---|---|---|---|
| For 2024 | For 2025 | For 2025 | ||||
| Reported Dec 2024 | Magnitude of Change | Predicted Dec 2024 | Magnitude of Change | Predicted May 2025 | Magnitude of Change | |
| Higher | 31% | +10.9% | 37% | +7.9% | 18% | +10.0% |
| Same | 66% | NA | 61% | NA | 70% | NA |
| Lower | 3% | -7.6% | 2% | -6.4% | 12% | -24.7% |
| Net Average | +3.2% | +2.8% | -1.1% | |||
