The economic downturn in the U.S. will continue for the rest of 2020, say the nation’s purchasing and supply executives in the Spring 2020 Semiannual Economic Forecast. Expectations for the remainder for 2020 have been clouded by the coronavirus (COVID-19) pandemic; both manufacturing and non-manufacturing sectors are signaling contraction.
That’s true for both the manufacturing and non-manufacturing sectors, according to a survey by the Institute for Supply Management.
Manufacturing revenue for 2020 is expected to decrease, on average, 10.3% This is 15.1 percentage points lower than the 4.8-percent increase forecast in December 2019 for all of 2020, and 12.2 percentage points lower than the 1.9-percent increase reported for 2019 over 2018.
Eighteen percent of respondents say that revenues for 2020 will increase 10.6 percent, on average, over 2019. Conversely, 58% say their revenues will decrease, on average, 21.2%, and the remaining 24% indicate no change.
With operating rate at 75.9 percent, an expected capital expenditure decrease of 19.1%, an expected decrease of 1.6% for prices paid for raw materials, and employment expected to decrease by 5.3% by the end of 2020, manufacturing has been negatively impacted by the coronavirus pandemic.
“With 15 of the 18 manufacturing sector industries — including five of the six big industry sectors — predicting revenue declines for 2020, panelists forecast that recovery will likely not occur until near the end of the year,” says Brian Fiore, chair of ISM’s Manufacturing Business Survey Committee.
The only two industries reporting expectations of growth in revenue for 2020 are: Apparel, Leather & Allied Products; and Food, Beverage & Tobacco Products.
Non-Manufacturing Summary
All 18 non-manufacturing industries expect revenue decreases in 2020 with respondents currently expecting a 10.4% net decrease in overall revenue, which is 13.8 percentage points less than the 3.4% increase that was forecast in December 2019. Nine percent of respondents say that revenues for 2020 will increase 13.1%, on average, over 2019. Meanwhile, 57% say their revenues will decrease, on average, 20.1%, and the remaining 34% indicate no change.
“Non-manufacturing will look to recover over the balance of 2020. Non-manufacturing companies are currently operating at 73.3% of normal capacity. Supply managers have indicated that prices are projected to increase 3.9% over the year, reflecting moderate inflation. Employment is projected to decrease 3%. All 18 industries are forecasting decreased revenues, a dramatic reversal from 2019, when 17 of 18 industries projected increased revenues for the year,” says Anthony S. Nieves, chair of the ISM Non-Manufacturing Business Survey Committee.