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ISM Forecast: CAPEX Growth Expected in Manufacturing and Non-Manufacturing

May 09, 2012, 08:00 AM
Filed Under: Economy

Economic growth is expected to continue in the United States throughout the remainder of 2012, say the nation's purchasing and supply executives in their spring 2012 Semiannual Economic Forecast.

Expectations for the remainder of 2012 continue to be positive in both the manufacturing and non-manufacturing sectors.

These projections are part of the forecast issued by the Business Survey Committee of the Institute for Supply Management (ISM). The forecast was presented by Bradley J. Holcomb, CPSM, CPSD, chair of the ISM Manufacturing Business Survey Committee; and by Anthony S. Nieves, C.P.M., CFPM, chair of the ISM Non-Manufacturing Business Survey Committee.

Predicted Capital Expenditures — 2012 vs. 2011


Survey respondents expect a 6.2% increase in capital expenditures in 2012. This is considerably greater than the December 2011 forecast when members predicted an increase of only 1.9% for 2012. Currently, 42% of respondents predict increased capital expenditures in 2012, with an average increase of 23.4%, while the 13% who said their capital spending would decrease expect an average decrease of 25.8%. Forty-five percent say they will spend the same in 2012 as they did in 2011.
The 14 industries expecting increases in capital expenditures in 2012 compared to 2011 — listed in order — are: Fabricated Metal Products; Printing & Related Support Activities; Primary Metals; Textile Mills; Petroleum & Coal Products; Furniture & Related Products; Chemical Products; Machinery; Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Computer & Electronic Products; and Nonmetallic Mineral Products.


Non-manufacturing purchasing and supply executives are expecting to increase their level of capital expenditures 3.6% in 2012 compared to 2011. The 34% of members expecting to spend more predict an average increase of 18.8%. An additional 15% of respondents anticipate a decrease averaging 20.3%. Fifty-one percent of the respondents expect to spend the same on capital expenditures in 2012 as in 2011.

The 15 industries expecting an increase in capital expenditures in 2012 from 2011 — listed in order — are: Transportation & Warehousing; Management of Companies & Support Services; Arts, Entertainment & Recreation; Retail Trade; Mining; Information; Finance & Insurance; Real Estate, Rental & Leasing; Other Services; Professional, Scientific & Technical Services; Construction; Accommodation & Food Services; Public Administration; Wholesale Trade; and Utilities.

Manufacturing Summary

Sixty-six percent of respondents from the panel of manufacturing supply management executives predict revenues will be 9.5% greater in 2012 compared to 2011, 15% expect a 12.1% decline, and 19% foresee no change. This yields an overall average expectation of 4.5% revenue growth among manufacturers in 2012, which is a modest reduction of 1 percentage point from December 2011 when the panel predicted a 5.5% increase in 2012 revenues. With operating capacity at 81.6%, an expected capital expenditure increase of 6.2%, and prices paid expected to increase a modest 0.4% from now through the end of 2012, manufacturers are positioned to grow revenues and contain costs through the remainder of the year.

Non-Manufacturing Summary

Fifty-five percent of non-manufacturing purchasing and supply executives expect their 2012 revenues to be greater by 9.9% than in 2011. Overall, respondents currently expect a 4.8% net increase in overall revenues, which is greater than the 3.1% increase that was forecast in December 2011.

Read the full ISM press release.

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