The U.S. economy will continue to expand for the rest of 2022, according to the Institute for Supply Management’s spring 2022 semiannual economic forecast. Despite continued inflation and geopolitical unrest, expectations for the remainder of 2022 are similar to those expressed in December 2021.
In the manufacturing sector, revenue for 2022 is expected to increase by 9.2% on average, according to the report. This is 2.7 percentage points higher than the December 2021 forecast of 6.5% and 4.9 percentage points lower than the 14.1% year-over-year increase reported for 2021. Meanwhile, 63% of respondents in the report said that revenues for 2022 will increase by 15.5% on average compared with 2021. Only 7% said revenues will decrease (10% on average) and 30% indicated no change.
With an operating rate of 87.2% and projected increases in capital expenditures (7.4%), prices paid for raw materials (11.1%) and employment (3.2%) by the end of 2022, manufacturing will continue its comeback from the turmoil of 2020 and 2021, according to the report.
“With 16 manufacturing sector industries expecting revenue growth in 2022 and 13 industries expecting employment growth in 2022, panelists forecast that recovery will continue the rest of the year. Sentiment in each sector was generally consistent with industry performance reports in the April 2022 Manufacturing ISM Report on Business, as well as the fall semiannual economic forecast conducted in December,” Timothy R. Fiore, CPSM, CPM, chair of the ISM’s manufacturing business survey committee, said.
As Fiore noted, 16 of 18 manufacturing sector industries are reporting projected revenue increases for the rest of 2022, including transportation equipment, machinery and electrical equipment.
In the services sector, respondents expect a 4.9% net increase in overall revenues, which is 0.6 percentage points higher than the 4.3% increase forecasted in December 2021. Meanwhile, 48% of respondents said revenues for 2022 will increase 13.4% on average compared with 2021. However, 12% expect their revenues to decrease (11.4% on average) and 40% indicated no change.
“The services sector will continue to grow for the rest of 2022. Services companies are currently operating at 91% of normal capacity. Supply managers indicate that prices are expected to increase 9.6% over the year, reflecting increasing inflation. Employment is projected to increase 2.5%. Each of the 18 industries forecast increased revenues, up from the 16 industries that predicted increases in December 2021,” Anthony S. Nieves, CPSM, CPM, APP, CFPM, chair of the ISM’s services business survey committee, said.
As Nieves noted, all 18 services sector industries expect revenue increases in 2022, including transportation and warehousing, mining and finance and insurance.