The U.S. economy will continue to expand slowly for the rest of 2024, according to purchasing and supply executives in the Spring 2024 Semiannual Economic Forecast from the Institute of Supply Management.
“With 12 manufacturing industries expecting revenue growth in 2024 and nine industries expecting employment growth in 2024, panelists forecast that recovery will continue the rest of the year, albeit somewhat softer than originally expected. Sentiment in each industry was generally consistent with performance reports in the April 2024 Manufacturing ISM Report On Business, as well as the fall Semiannual Economic Forecast conducted in December,” said Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee.
Of 18 industries, respondents for 12 projected revenue increases through the rest of 2024: Apparel, Leather & Allied Products; Food, Beverage & Tobacco Products; Transportation Equipment; Computer & Electronic Products; Chemical Products; Nonmetallic Mineral Products; Primary Metals; Textile Mills; Furniture & Related Products; Fabricated Metal Products; Electrical Equipment, Appliances & Components, and Paper Products.
Respondents in the Services sector expected a 2.9% net increase in overall revenues, which is four percentage points lower than the 6.9% increase forecast in December 2023. As for the services case, 36% of respondents said that revenues for 2024 will increase on average by 10.3% versus 2023. However, 10% of respondents expect their revenues to decrease by 7.5% on average, and 54% expect no change.
“The services sector will continue to grow for the rest of 2024. Services companies are currently operating at 88.6% of normal capacity. Supply managers indicate that prices are expected to increase by 3.2% over the year, reflecting increasing inflation. Employment is projected to increase by 0.8%. Thirteen industries forecast increased revenues, down from the 16 industries that predicted increases in December 2023,” said Anthony Nieves, chair of the ISM Services Business Survey Committee.
Of 18 industries in the sector, 13% expect revenue increases in 2024: Retail Trade; Mining; Transportation & Warehousing; Other Services; Management of Companies & Support Services; Accommodation & Food Services; Professional, Scientific & Technical Services; Construction; Wholesale Trade; Public Administration; Utilities; Information, and Finance & Insurance.
Economic activity in the services sector actually contracted in April, slipping for the first time since December 2022 and ending a period of 15 consecutive months of growth. The Services Purchasing Managers Index registered 49.4%, just under the 50% break-even point. The April reading was two percentage points lower than March’s reading of 51.4%. The Business Activity Index registered 50.9% in April, which is 6.5 percentage points lower than the 57.4% recorded in March. The New Orders Index expanded in April for the 16th consecutive month, but the figure of 52.2% was 2.2 percentage points lower than the March reading of 54.4%. The Employment Index contracted for the fourth time in five months with a reading of 45.9%, a 2.6-percentage point decrease compared to the 48.5% recorded in March.
The 13 industries reporting an increase in business activity in April were Accommodation & Food Services; Agriculture, Forestry, Fishing & Hunting; Finance & Insurance; Mining; Wholesale Trade; Utilities; Educational Services; Public Administration; Retail Trade; Construction; Health Care & Social Assistance; Management of Companies & Support Services and Transportation & Warehousing. The four industries reporting an April decrease in business activity were Other Services: Arts, Entertainment & Recreation, Real Estate, Rental & Leasing and Information.
Economic activity in the manufacturing sector contracted in April after one month of expansion in March and following 16 consecutive months of contraction, coming in at 49.2%, down 1.1 percentage points from the 50.3% recorded in March. The New Orders Index moved back into contraction territory after one month of expansion, registering 49.1%, 2.3 percentage points lower than the 51.4% recorded in March, while the Employment Index registered 48.6%, up 1.2 percentage points from March’s figure of 47.4%. The April reading of the Production Index, at 51.3%, was 3.3 percentage points lower than the 54.6% March figure.
The nine manufacturing industries reporting growth in April were: Nonmetallic Mineral Products; Printing & Related Support Activities; Primary Metals; Textile Mills; Electrical Equipment, Appliances & Components; Petroleum & Coal Products; Transportation Equipment; Chemical Products, and Plastics & Rubber Products. The seven industries reporting contraction in April were Miscellaneous Manufacturing, Machinery, Furniture & Related Products, Wood Products, Food, Beverage & Tobacco Products, Fabricated Metal Products and Paper Products.
