US manufacturing should snap out of slump and grow in ’24 – ISM

HOUSTON (ICIS)–US manufacturing should emerge from its downturn and expand in 2024, according to the results of a survey published on Friday by the Institute for Supply Management (ISM).

“Manufacturing’s purchasing and supply executives expect to see overall growth in 2024,” said Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee. “They are optimistic about overall business prospects for the first half of 2024 and more excited about faster growth in the second half.”

Any sustained growth would follow a lengthy slump. In November, manufacturing output fell month on month for the 13th consecutive month, according to the ISM’s purchasing managers’ index (PMI). US chemical output fell for the 15th consecutive month,

Among the general findings for 2024 manufacturing:

• Revenue should increase by 5.6% in a total of 15 industries.
• Employment should grow by 2% versus levels in December 2023.
• Manufacturing should grow in H1, and the pace of growth should quicken in the second half.
• First half 2024 profit margins should expand versus second half 2023.

In regards to sentiment:

• 11 industries expect H1 2024 will be better than H2 2023, including petroleum and coal products (5th most optimistic); chemical products (6th) and plastics and rubber products (9th).
• 14 industries expect H2 2024 will be better than H1 2024, including plastic and rubber products (6th); and chemical products (7th).

In regards to capacity and capital expenditures:

• Capital expenditures should rise by 11.9% in a total of nine industries.
• Capacity utilization should rise 1 point to 83%.
• Production capacity should increase by a total of 7.8% for 14 industries.

In regards to inflation,

• Labor and benefit costs should rise by 5.2%.
• Costs for raw materials should rise by 3.2% during the first five months of 2024. For all of 2024, they should increase by 3.3%. Chemical products and plastic and rubber products do not expect costs to rise during either of these time frames.

The following table shows how chemical products; plastic and rubber products; and petroleum and coal products ranked among the industries that reported growth among various categories.

	Revenue Growth (15 total)	Production Capacity Expansion (14 total)	Capital Expenditures (9 total)	Profit Margins through May ’24 (12 total)
Chemical Products	10	5	–	9
Plastic and Rubber Products	13	9	–	–
Petroleum and Coal Products	15	–	2	–

Source: ISM

The ISM survey also covered the 2024 outlook for the services sector.

• Revenue in 2024 should increase in 16 out of 18 service sector industries.
• Revenue should increase by 6.9%.
• Capital expenditures should increase by 2.9%.
• Employment should grow by 0.8%
• Services should contract in the first half and rebound strong in the second half.

Thumbnail shows an industrial plant. Image by Wallace Woon/EPA/REX/Shutterstock