Manufacturing executives are optimistic that the industry is set for growth next year despite a slowdown in 2022, according to a recent forecast from the Institute for Supply Management.
Forty-five percent of purchasing and supply manufacturing executives expect 2023 to bring overall improved revenues compared to 2022, the survey found. Executives expect a slow start to the year, however, with growth not returning until the second half.
Revenues are expected to increase for 15 out of 18 manufacturing industries, led by plastics and rubber products; transportation equipment; and apparel, leather and allied products. Executives anticipate a 5.5% net increase in overall revenues in 2023, compared to a 9.3% increase reported for 2022.
Raw material prices are expected to keep climbing by 2.5% in the first five months of next year, with an overall increase of 2% for 2023. That number is significantly down from a year ago, when prices jumped 11.4% between the end of 2021 and 2022.
The panel of respondents were also optimistic when it came to employment, expecting workforces to grow by 3.9% compared to 2022. At the same time, however, labor costs are also likely to rise by a forecasted 5.8%.
"We're not having those deep cuts that we would normally see are going into a deep tranche recessionary period," Anthony Nieves, chair of the ISM Services Business Survey Committee, said on a Dec. 15 call with reporters.
The optimism is an improvement from recent ISM surveys. The manufacturing sector contracted in November for the first time in 29 months, as order rates softened and manufacturers prepared for lower output.
Now, manufacturers are looking months ahead to greater growth. Survey respondents anticipated an increase in the capital reinvestment growth rate, as well as a boost in their capacity to provide services and produce output.
"Let's see how we trend out through the first quarter and that will give us a clearer picture," Nieves said. "But from what our respondents are telling us, in both sectors there's still continued growth out there moving forward.