US manufacturing purchasing and supply executives expect the industry to grow further in 2018, as they are confident with business prospects for the coming year. This is according to the Institute for Supply Management’s (ISM) survey.
Timothy Fiore, ISM’s Manufacturing Business Survey Committee chairman, said that many executives feel good about business opportunities for the first half of next year, while the expansion will continue through the remaining six months.
The coming months may be a good time to invest in automated purchasing software to track expenses and new orders among others, as companies expect to spend more.
ISM expects capital spending to grow by 2.7%, while manufacturing revenue will increase between 5.1% and 7.8% in 2018. The US government’s tax reforms could encourage more companies to raise their capital expenditures.
ISM’s survey also revealed that 70% of companies anticipate higher earnings, while 25% and 4% expect the industry to either remain the same or worsen, respectively. Nearly all segments of the industry showed optimism for the following 12 months.
While growth awaits the manufacturing industry, it needs to resolve certain challenges such as a shortage of skilled workers. More than 60% of manufacturing and services firms struggle to fill job vacancies, ISM noted.
Higher wages to lure qualified talents serve as the solution for 44% of manufacturing companies and 37% of services enterprises.
This trend may cause a slight improvement in industry employment, which analysts expect to rise at 1.2% in 2018. At the same time, labor and benefit costs would increase 2.1% on average due to companies that increase wages.
Fiore believes that salaries may become higher if the industry still finds it difficult to recruit new employees.
Growth prospects for the manufacturing industry remain bright for 2018, despite some challenges. How do you intend to take advantage of an upbeat outlook for US manufacturing?