The economic downturn in the U.S. will continue for the rest of 2020, say the nation's purchasing and supply executives in the Spring 2020 Semiannual Economic Forecast. Expectations for the remainder for 2020 have been clouded by the coronavirus (COVID-19) pandemic; both manufacturing and non-manufacturing sectors are signaling contraction.

These projections are part of the forecast issued by the Institute for Supply Management (ISM) Business Survey Committees. The forecast was presented by Timothy R. Fiore, CPSM, C.P.M., Chair of the ISM Manufacturing Business Survey Committee, and Anthony S. Nieves, CPSM, C.P.M., A.P.P., CFPM, Chair of the ISM Non-Manufacturing Business Survey Committee.

Manufacturing Summary
Revenue for 2020 is expected to decrease, on average, by 10.3 percent. This is 15.1 percentage points lower than the 4.8-percent increase forecast in December 2019 for all of 2020, and 12.2 percentage points lower than the 1.9-percent increase reported for 2019 over 2018. Eighteen percent of respondents say that revenues for 2020 will increase 10.6 percent, on average, over 2019. Conversely, 58 percent say their revenues will decrease, on average, 21.2 percent, and the remaining 24 percent indicate no change. With operating rate at 75.9 percent, an expected capital expenditure decrease of 19.1 percent, an expected decrease of 1.6 percent for prices paid for raw materials, and employment expected to decrease by 5.3 percent by the end of 2020, manufacturing has been negatively impacted by the coronavirus pandemic.

"With 15 of the 18 manufacturing sector industries — including five of the six big industry sectors — predicting revenue declines for 2020, panelists forecast that recovery will likely not occur until near the end of the year. The sectors' responses were consistent with the industry-performance reports in April's Report On Business," said Fiore.

The two industries reporting expectations of growth in revenue for 2020 are: Apparel, Leather & Allied Products; and Food, Beverage & Tobacco Products. The 15 manufacturing industries expecting decreases in revenue in 2020 — listed in order — are: Printing & Related Support Activities; Petroleum & Coal Products; Transportation Equipment; Miscellaneous Manufacturing; Primary Metals; Plastics & Rubber Products; Machinery; Furniture & Related Products; Textile Mills; Nonmetallic Mineral Products; Fabricated Metal Products; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Chemical Products; and Paper Products.

Non-Manufacturing Summary
Respondents currently expect a 10.4-percent net decrease in overall revenue, which is 13.8 percentage points less than the 3.4-percent increase that was forecasted in December 2019. Nine percent of respondents say that revenues for 2020 will increase 13.1 percent, on average, over 2019. Meanwhile, 57 percent say their revenues will decrease, on average, 20.1 percent, and the remaining 34 percent indicate no change.

"Non-manufacturing will look to recover over the balance of 2020. Non-manufacturing companies are currently operating at 73.3 percent of normal capacity. Supply managers have indicated that prices are projected to increase 3.9 percent over the year, reflecting moderate inflation. Employment is projected to decrease 3 percent. All 18 industries are forecasting decreased revenues, a dramatic reversal from 2019, when 17 of 18 industries projected increased revenues for the year," said Nieves.

All 18 non-manufacturing industries expect revenue decreases in 2020, listed in order: Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing & Hunting; Transportation & Warehousing; Mining; Accommodation & Food Services; Retail Trade; Professional, Scientific & Technical Services; Construction; Health Care & Social Assistance; Wholesale Trade; Other Services; Public Administration; Real Estate, Rental & Leasing; Educational Services; Management of Companies & Support Services; Information; Utilities; and Finance & Insurance.

Summary

Manufacturing

• Operating rate is currently at 75.9 percent of normal capacity.
• Production capacity is expected to decrease 3.6 percent in 2020.
• Capital expenditures are expected to decrease 19.1 percent in 2020.
• Prices paid decreased 2.8 percent through May 2020.
• Prices of raw materials are expected to decrease a total of 1.6 percent for all of 2020, indicating an expected increase of 1.2 percent in prices for the remainder of the year.
• Manufacturing employment is expected to decrease by 5.3 percent by the end of 2020.
• Manufacturing revenue is expected to decrease 10.3 percent in 2020.
• Overall, manufacturing is expected to shrink in 2020.

Non-Manufacturing

• Operating rate is currently 73.3 percent of normal capacity.
• Production capacity is expected to decrease 2.8 percent in 2020.
• Capital expenditures are expected to decrease 13.4 percent in 2020.
• Prices paid increased 4 percent through May 2020.
• Prices of raw materials are expected to increase a total of 3.9 percent for all of 2020, indicating an expected decrease of 0.1 percent in prices for the remainder of the year.
• Non-manufacturing employment is expected to decrease 3 percent during the rest of 2020.
• Non-manufacturing revenue is expected to decrease 10.4 percent in 2020.
• The non-manufacturing sector is projected to shrink in 2020.

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