TEMPE, Ariz. – Manufacturing executives predict economic gains for the rest of 2023, although at a pace softer than predicted previously.

According to the Institute for Supply Management’s semiannual economic forecast, revenue for 2023 is expected to increase, on average, by 1.7%. That’s 3.8 percentage points lower than the December 2022 forecast of 5.5%, and 7.6 percentage points lower than the 9.3% year-over-year increase reported for 2022.

Forty percent of respondents say that revenues for 2023 will increase, on average, 11.6% compared with 2022; 20% say revenues will decrease (14.6%, on average), and 40% indicate no change.

“With 10 manufacturing sector industries expecting revenue growth in 2023 and 11 industries expecting employment growth in 2023, panelists forecast that recovery will continue the rest of the year, albeit somewhat softer than originally expected,” said Timothy Fiore, ISM chairman.

Here are some other key takeaways:

• Operating rate is 82% of normal capacity.
• Production capacity is expected to increase 0.4% in 2023.
• Capital expenditures are expected to increase 0.4% in 2023.
• Prices paid increased 2.3% through April 2023.
• Prices of raw materials are expected to increase a total of 1% for all of 2023, indicating an expected decrease of 1.3 percentage points for the rest of the year.

Things were a bit more pessimistic for furniture manufacturing. Furniture was one of eight industries to not predict an increase in revenue. It also was one of seven to predict employment numbers to decrease.

The survey gave some insight into labor and supply issues:

• In May 2022, 89% said their organization had difficulty hiring workers to fill open positions. This year, that number dropped to 67%.
• To deal with difficulty in filling positions, 41% said they raised wages, 33% didn’t hire as many workers as they would have liked, and 4% lowered hiring standards.
• Looking ahead to potential supply chain problems in the second half, 46% said the supply chain would be better, 43% said same, and 12% said worse.

Source: https://www.furnituretoday.com/