Economy

ISM Forecasts Downturn Until End of 2020
Written by Sandy Williams
May 15, 2020
The economic downturn in the U.S. will continue for the rest of this year, says the Institute for Supply Management in their Spring 2020 Semiannual Economic Forecast, based on survey responses from manufacturing purchasing and supply executives.
The COVID-19 crisis has cast a shadow over the manufacturing sector that is unlikely to lift until the end of 2020. Manufacturing revenue is expected to decrease, on average, by 10.3 percent in 2020 compared to the 4.8 percent gain previously expected.
“Generally, everything is predicted to be down compared to where we were entering the year,” said Timothy Fiore, chairman of the ISM Manufacturing Business Survey Committee, during a press conference call.
Operating rates are currently at 75.9 percent of normal capacity and are expected to decrease 3.6 percent this year. Primary and fabricated metals are among the industries expecting production decreases for 2020.
Capital expenditures are expected to decline 19.1 percent this year compared to a 2.1 percent decline predicted by the panel in the December 2019 forecast for 2020. In the latest survey, only 10 percent of respondents said they will increase capital expenditures in 2020 while 56 percent said their spending would decrease by an average of 38.7 percent. Thirty-four percent anticipate no change from 2019 levels.
Prices for raw materials decreased 2.8 percent through May 2020, but are expected to increase 1.2 percent in the remainder of the year resulting in a 1.6 percent decrease for the full year.
Manufacturing employment is expected to be down 5.3 percent in 2020 with only paper products expecting to add staffing.
“There are some major problems here with the economic startup, and hopefully it is not going to lead to a steep slowdown again,” said Fiore. “That remains to be seen. There are state governors all kind of doing their own thing and trying to balance the economic versus the personal issues, which is a tough job right now.”

Sandy Williams
Read more from Sandy WilliamsLatest in Economy

Fewer manufacturers optimistic about the economy
PMA’s April report shows that only 16% of surveyed manufacturers anticipate an increase in economic activity in the next three months (down from 23% in March)

Architecture billings continue to slide in March
Architecture firms said billings continued to decline in March, according to the latest Architecture Billings Index (ABI) released by the American Institute of Architects (AIA) and Deltek.

Beige Book shows concerns about trade policy
Manufacturing was mixed, but two-thirds of districts said activity was little changed or had declined.

New York state manufacturing index drops again in April
Firms were pessimistic, with the future general business conditions index falling to its second lowest reading in the more than 20-year history of the survey

Construction adds 13,000 jobs in March
The construction sector added 13,000 jobs, seasonally adjusted, in March, but tariffs could undermine the industry.