US manufacturing expected to see growth through 2011

17 May 2011 17:30  [Source: ICIS news]

An Eastman Chemical plant in Longview TexasWASHINGTON (ICIS)--US manufacturing executives expect growth to continue and revenues to increase through the rest of this year, a key outlook survey reported on Tuesday, although producers will struggle to contain costs as raw material prices rise.

In its semi-annual outlook survey of manufacturing industries, the Institute for Supply Management (ISM) said that 68% of responding production executives predict that their companies’ revenues will be 13.2% higher for full-year 2011 compared with last year.

This represents a growing level of business confidence among manufacturers, who at the start of this year said they expected 2011 revenue gains of only about 5.6% compared with 2010.

“Much of manufacturing has emerged from the economic downturn and is experiencing significant growth,” said Norbert Ore, chairman of the ISM survey committee.

“Capacity utilisation is back to typical levels and manufacturers are significantly investing in their businesses,” he said. “The positive forecast for revenue growth and improved employment will drive continuation of the recovery in the sector.”

Among the 18 manufacturing sectors surveyed by the institute are chemicals and plastics. 

Other production industries among the 18 are many that are important downstream consuming sectors for chemicals and resins, including fabricated metals, apparel, machinery, electronics, transportation equipment, food and beverages and furniture manufacturing.

Ore said that the survey showed that manufacturers are now operating at 83.2% of normal capacity, “representing an increase from the 80.2% reported in December 2010 and the 72.8% reported in April 2010”.

At 83.2%, capacity utilisation is at its highest level since December 2006 - before the onset of recession - when it was at 84.5%.

But the institute cautioned that manufacturing sector spending and cost increases would oblige managers to be careful.

Capital expenditures among manufacturers were expected to increase by nearly 18% this year, the survey showed, and prices paid for raw materials are forecast to increase by 7.4% for full-year 2011.

“Manufacturers will be challenged to grow revenues and contain costs through the remainder of the year,” said Ore.

Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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