May 15, 2021

U.S. Manufacturing Rebound Carries Over to 2021

2 min read
Expansion of U.S. manufacturing growth that began trending upward last summer is expected to continue...

Expansion of U.S. manufacturing growth that began trending upward last summer is expected to continue through 2021, along with growing capital spending and rising capacity utilization, according to the Institute for Supply Management.

ISM’s semiannual economic forecast released this week predicts U.S. manufacturers will record a healthy net increase in revenues totaling 6.9 percent this year, reversing a 1.3 percent decline during pandemic-plagued 2020. Fifteen of 18 industry sectors tracked by ISM are expected to record increases, including the computer and electronic products segment.

U.S. manufacturers have recorded seven consecutive months of growth beginning last June, ISM reported. “Manufacturing’s purchasing and supply executives expect to see strong growth in 2021,” said Timothy Fiore, chairman of the ISM Manufacturing Business Survey Committee

“They are optimistic about overall business prospects for the first half of 2021, with business continuing to expand through the second half and at higher rates.”

The ISM survey found that 59 percent of purchasing and supply executives polled expect revenue growth in 2021.

As net revenues increase, so too do projections for capital spending: ISM predicts a 2.4 percent jump in capex investments over last year. The forecast mirrors other key sectors such as semiconductor manufacturing, where infrastructure investments jumped 34 percent in 2020.

Source: ISM

Meanwhile, overall U.S. manufacturing capacity utilization jumped nearly 10 percentage points on an annual basis to 85.7 percent, reflecting sustained demand for products ranging from electronics to paper products.

The U.S. manufacturing surge is also expected to generate badly needed jobs, with employment expected to grow 2.5 percent this year on an annual basis. Labor shortages will push up wages and benefits by an average of 2.7 percent, ISM predicts.

As U.S. manufacturing rebounds, supply chain issues persist, especially at west coast port facilities clogged by a surge of end-of-year cargo volumes. “The pandemic also impacted the availability of critical workers throughout the supply chain, including those working at the ports, railroads, trucking companies, warehouses and retail locations,” the Pacific Merchant Shipping Association warned earlier this month.

U.S. manufacturers were nevertheless upbeat about export prospects in 2021, with more than half expecting increased orders, including a small percentage anticipating “substantial” increases in demand during the first half of 2021.

Those manufacturing gains are expected to persist, with 49 percent of executives polled by ISM anticipating second-half gains to exceed the first six months of this year.

“The manufacturing sector is currently expanding, and the forecast indicates that it may continue in the first half of 2021 and expand at a slightly higher rate in the second half of 2021,” ISM concluded.

The institute’s manufacturing forecast is based on survey data gathered in December 2020.


The post U.S. Manufacturing Rebound Carries Over to 2021 appeared first on EETimes.

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