US chems, plastics expect higher revenues, expenditures in 2011

07 December 2010 17:44  [Source: ICIS news]

HOUSTON (ICIS)--The US chemical and plastics industries expect higher revenues and rising capital expenditures in 2011 from 2010, the US Institute for Supply Management (ISM) said on Tuesday.

In its semi-annual economic forecast, the ISM noted that its panel of manufacturing and supply executives expected a 5.6% net increase in overall revenues for 2011, with 65% of respondents predicting higher sales.

“Manufacturing purchasing and supply executives have expectations for continued growth and are optimistic about their organisations’ prospects as they consider the first half of 2011, and they are even more positive about the second half,” said Norbert Ore, chair of the ISM manufacturing business survey committee.

By sector, the plastics and rubber products group joined chemical respondents in predicting higher revenues and expenditures, according to the ISM.

Overall, purchasing and supply executives predicted capital expenditures to increase 14.5% in 2011 after rising 5.9% in 2010.

“While 2010 has been a year of recovery in manufacturing, our forecast sees improvement in both investment and employment in 2011,” Ore said.

The chemicals and plastics sectors were split on the issue of employment, though. Chemical firms predicted rising employment in 2011, joining the overall manufacturing forecast of 1.8% job growth.

However, the plastics and rubber products sector did not expect higher employment, according to the survey.

Both groups predicted higher export levels in 2011, but while chemical respondents also forecast higher imports, plastics firms expect flat-to-lower imports – running against the overall manufacturing trend.

Both sectors could be pressured by rising raw material costs, the ISM said. Both chemical and plastics respondents predicted their prices paid through April 2011 to be ahead of the overall manufacturing increase average of 2.7%.

For full-year 2011, manufacturing respondents forecast a 4.0% increase from 2010, with the plastics industry expecting an even higher rate of increase.

Manufacturing respondents also predicted the US dollar to weaken on average in 2011 compared with major trading partner currencies, a trend which often points to higher crude values.

Elsewhere, chemicals and plastics respondents joined the broad manufacturing industry in reporting higher year-on-year operating rates, with both at higher-than-average levels. However, a 2011 forecast was not given.

Overall, the attitude of manufacturing executives was optimistic, the ISM said, with 91% of respondents forecasting 2011 to be better or the same as 2010.

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By: Ben DuBose
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