The economy is purring, and will continue to expand in 2018. That’s good news for bev/al marketers, who learned again during the Great Recession that while bev/al volumes may be relatively stable during tough times, revenue definitely takes a hit as drinkers trade down.
Just how the economy is purring became clear today when the Institute for Supply Management issued a year-end update. Production capacity in America’s factories rose 4.3% this year, bring the operating rate to 85.8%. Capacity is expected to expand 2.7% next year.
Execs polled by ISM predicted labor and benefit costs will rise 2.1% next year, and manufacturing employment will increase 1.2%. Manufacturing revenue is up 4.1% this year and is expected to rise 5.1% next year.
If manufacturing is doing well, nonmanufacturing is doing better. The non-manufacturing operating rate is currently 91.9% after a 2.9% increase in production capacity. Capacity is expected to increase another 3.4% next year, ISM said. Labor and benefit costs are expected to rise 2.2%, and employment is expected to rise 1.5%.
More money and more workers mean more opportunity for bev/al marketers to deliver luxury products at an affordable price. And it just might help beer if more of beer’s core drinkers are working and taking home more money.