TEMPE, Ariz. — December 15, 2022 — Economic improvement in the United States will continue in 2023, say the nation’s purchasing and supply management executives in the December 2022 Semiannual Economic Forecast. Revenues are expected to increase in 15 of 18 manufacturing industries and 14 of 18 services-sector industries. Capital expenditures are expected to increase by 2.6 percent in the manufacturing sector (after a 12-percent increase in 2022) and increase by 2.8 percent in the services sector (after a 6-percent increase in 2022). The manufacturing employment base is expected to grow by 3.9 percent and the services employment base is expected to increase by 1 percent in 2023. Compared to the first half (H1), growth in the second half (H2) of the year is projected to rebound in manufacturing and accelerate in services.
These projections are part of the forecast issued by the Business Survey Committees of Institute for Supply Management® (ISM®). The forecast was released today by Timothy R. Fiore, CPSM, C.P.M, Chair of the ISM Manufacturing Business Survey Committee, and by Anthony S. Nieves, CPSM, C.P.M., A.P.P, CFPM, Chair of the ISM Services Business Survey Committee.
Manufacturing Summary
Expectations for 2023 are positive, as 45 percent of survey respondents expect revenues to be greater in 2023 than in 2022. The panel of purchasing and supply executives expects a 5.5-percent net increase in overall revenues for 2023, compared to a 9.3-percent increase reported for 2022. Fifteen of the 18 manufacturing industries expect revenue improvement in 2023, listed in order of largest to smallest projected increase: Plastics & Rubber Products; Transportation Equipment; Apparel, Leather & Allied Products; Fabricated Metal Products; Primary Metals; Food, Beverage & Tobacco Products; Printing & Related Support Activities; Furniture & Related Products; Machinery; Chemical Products; Computer & Electronic Products; Miscellaneous Manufacturing; Paper Products; Electrical Equipment, Appliances & Components; and Textile Mills.
“Manufacturing’s purchasing and supply executives expect to see overall growth in 2023. They are pessimistic about overall business prospects for the first half of 2023 but project growth returning in the second half. According to the ISM® Report On Business®, manufacturing grew for 29 consecutive months from June 2020 through October 2022, but dipped into contraction in November after declining in five out of the previous six months. Respondents expect raw materials pricing pressure to increase in 2023, but still see H1 2023 profit margins improving over H2 2022. Wages and employment will continue to grow. Manufacturers also predict growth in both exports and imports in 2023,” says Fiore.
In the manufacturing sector, respondents report operating at 88.4 percent of normal capacity, up 0.8 percentage point from the 87.2 percent reported in May 2022. Purchasing and supply executives predict that capital expenditures will increase year over year by 2.6 percent in 2023, compared to the 12-percent increase reported for 2022 compared to 2021. Manufacturers expect employment in the sector to grow by 3.9 percent in 2023 relative to December 2022 levels, while labor and benefit costs are expected to increase an average of 5.8 percent. Respondents also expect the U.S. dollar to strengthen against the currencies of seven major trading partners in 2023.
The panel predicts that prices paid for raw materials will increase 2.5 percent during the first five months of the year, with an overall increase of 2 percent for 2023. This compares to a reported 11.4 percent increase in raw materials prices between the end of 2021 and 2022.
Services Summary Half (50 percent) of services supply management executives expect their 2023 revenues to be higher than in 2022. They expect a 3.1-percent net increase in overall revenues for 2023 compared to a 2.1-percent increase reported for 2022. The 14 industries expecting revenue increases in 2023 — listed in order of largest to smallest projected increase — are: Transportation & Warehousing; Mining; Professional, Scientific & Technical Services; Management of Companies & Support Services; Accommodation & Food Services; Real Estate, Rental & Leasing; Retail Trade; Utilities; Construction; Public Administration; Information; Finance & Insurance; Educational Services; and Other Services.
“Services supply executives report operating at 89.9 percent of normal capacity, slightly less than the 91 percent reported in May 2022. They are optimistic about continued growth in the first half of 2023 and expect more growth in the second half, with a projected increase in growth rate for capital reinvestment. They forecast that their capacity to produce products and provide services will rise by 3.4 percent during 2023, and capital expenditures will increase by 2.8 percent. Services panel members also predict their overall employment will increase by 1 percent during 2023,” says Nieves.
Respondents in services industries expect the prices they pay for materials and services to increase by 8.4 percent during 2023. They also forecast that their overall labor and benefit costs will increase 3.5 percent. Profit margin decreases were reported in the second and third quarters of 2022 and respondents expect them to decrease between now and May 2023.
Operating Rate
Manufacturing
Manufacturing purchasing and supply executives report their companies are currently operating at 88.4 percent of normal capacity. This is a 1.2-percentage point increase when compared to May 2022 (87.2 percent) and a decrease when compared to December 2021 (88.7 percent). The following eight industries — listed in order — are operating at or above the average rate of 88.4 percent: Petroleum & Coal Products; Nonmetallic Mineral Products; Paper Products; Computer & Electronic Products; Transportation Equipment; Apparel, Leather & Allied Products; Wood Products; and Miscellaneous Manufacturing.
Services
Services supply executives report their organizations are currently operating at 89.9 percent of normal capacity. This is a decrease compared to the 91 percent reported in May 2022, but above what was reported in December 2021 (89.4 percent). The 12 industries operating at or above the average capacity level of 89.9 percent — listed in order — are: Arts, Entertainment & Recreation; Accommodation & Food Services; Retail Trade; Public Administration; Utilities; Finance & Insurance; Agriculture, Forestry, Fishing & Hunting; Educational Services; Management of Companies & Support Services; Information; Real Estate, Rental & Leasing; and Construction.
| Operating Rate | ||||||
| Manufacturing | Services | |||||
| Dec 2021 | May 2022 | Dec 2022 | Dec
2021 |
May 2022 | Dec 2022 | |
| 90%+ | 60 % | 57 % | 57 % | 63 % | 65 % | 66 % |
| 50%-89% | 39 % | 42 % | 41 % | 36 % | 34 % | 32 % |
| Below 50% | 1 % | 1 % | 2 % | 1 % | 1 % | 2 % |
| Est. Overall Average | 88.7 % | 87.2 % | 88.4 % | 89.4 % | 91.0 % | 89.9 % |
Production Capacity
Manufacturing
Production capacity in manufacturing increased 6.7 percent in 2022, as 49 percent of purchasing and supply executives reported an average capacity increase of 15.4 percent, 7 percent reported an average decrease of 12.4 percent, and 44 percent reported no change. This compares to a May 2022 predicted increase in production capacity of 5.8 percent for 2022. Expectations for 2023 are for an increase of 5.3 percent. The 15 industries that expect an increase in production capacity in 2023 — listed in order — are: Plastics & Rubber Products; Apparel, Leather & Allied Products; Transportation Equipment; Food, Beverage & Tobacco Products; Paper Products; Fabricated Metal Products; Primary Metals; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Miscellaneous Manufacturing; Chemical Products; Machinery; Wood Products; Furniture & Related Products; and Textile Mills.
| Manufacturing Production Capacity | ||||||
| Predicted For 2022 | Reported For 2022 | Predicted For 2023 | ||||
| Predicted
May 2022 |
Magnitude of Change | Reported Dec 2022 | Magnitude of Change | Predicted
Dec 2022 |
Magnitude of Change | |
| Higher | 37 % | +17.4 % | 49 % | +15.4 % | 43 % | +13.0 % |
| Same | 58 % | NA | 44 % | NA | 52 % | NA |
| Lower | 5 % | -13.0 % | 7 % | -12.4 % | 4 % | -8.4 % |
| Net Average | +5.8 % | +6.7 % | +5.3 % | |||
The principal means of achieving increases in production capacity in 2022 were (in order of importance):
1) Additional personnel
2) More hours worked with existing personnel
3) Additional plant and/or equipment
4) Fewer shutdowns
Services
The capacity to produce products or provide services in the services sector increased 3.9 percent during 2022. This is greater than what was predicted in May 2022 and 0.6 percentage point higher than the 3.3 percent predicted for 2022 in December 2021. For 2023, 37 percent of services supply managers expect increases averaging 9.8 percent, and 2 percent of respondents expect decreases averaging 10.7 percent. Sixty-one percent expect no change in capacity. The 15 industries expecting increases in capacity in 2023 — listed in order — are: Transportation & Warehousing; Management of Companies & Support Services; Public Administration; Accommodation & Food Services; Utilities; Real Estate, Rental & Leasing; Information; Wholesale Trade; Construction; Professional, Scientific & Technical Services; Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing & Hunting; Educational Services; Finance & Insurance; and Health Care & Social Assistance.
| Services Production or Provision Capacity | ||||||
| Predicted For 2022 | Reported For 2022 | Predicted For 2023 | ||||
| Predicted
May 2022 |
Magnitude of Change | Reported
Dec 2022 |
Magnitude of Change | Predicted
Dec 2022 |
Magnitude of Change | |
| Higher | 22 % | +12.4 % | 34 % | +14.9 % | 37 % | +9.8 % |
| Same | 69 % | NA | 57 % | NA | 61 % | NA |
| Lower | 9 % | -15.6 % | 9 % | -12.3 % | 2 % | -10.7 % |
| Net Average | +1.2 % | +3.9 % | +3.4 % | |||
The principal means of achieving increases in production or provision capacity in 2022 were (in order of importance):
1) Additional personnel (permanent, temporary or contract)
2) Additional plant and/or equipment
3) Replaced equipment with technically advanced equipment
4) More hours worked with existing personnel
Capital Expenditures — 2022 versus 2021
Manufacturing
Purchasing and supply executives report 2022 capital expenditures increased 12 percent on average when compared to 2021 levels. Expenditures for 2022 beat survey respondents’ previous expectations, as they predicted an increase of 7.4 percent for the year in May 2022. The 45 percent of purchasers who reported increased capital expenditures in 2022 indicated an average increase of 33.9 percent, while the 11 percent who said their capital spending was reduced reported an average decrease of 29.2 percent. Forty-four percent of respondents said their levels of spend were unchanged in 2022. The 12 industries showing increases in capital expenditures for 2022 — listed in order of percentage increase — are: Printing & Related Support Activities; Computer & Electronic Products; Miscellaneous Manufacturing; Plastics & Rubber Products; Nonmetallic Mineral Products; Petroleum & Coal Products; Transportation Equipment; Chemical Products; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Paper Products; and Food, Beverage & Tobacco Products.
Services
Services supply management executives report their level of capital expenditures in 2022 increased 6 percent compared to 2021. This is much lower than the 15.2-percent increase reported for 2021 and slightly lower than the 6.2-percent increase predicted by respondents in May 2022. Thirty-eight percent report increases averaging 22.4 percent, while 15 percent report decreases averaging 16.1 percent. Forty-seven percent indicate they spent the same on capital expenditures in 2022 as in 2021. The 12 industries experiencing increases in capital expenditures in 2022 — listed in order of percentage increase — are: Mining; Real Estate, Rental & Leasing; Public Administration; Educational Services; Accommodation & Food Services; Information; Transportation & Warehousing; Utilities; Construction; Arts, Entertainment & Recreation; Wholesale Trade; and Professional, Scientific & Technical Services.
| Capital Expenditures 2022 vs. 2021 | ||||||
| Manufacturing | Services | |||||
| Predicted May 2022 | Reported Dec 2022 | Magnitude of Change | Predicted May 2022 | Reported Dec 2022 | Magnitude of Change | |
| Higher | 32 % | 45 % | +33.9 % | 40 % | 38 % | +22.4 % |
| Same | 57 % | 44 % | NA | 52 % | 47 % | NA |
| Lower | 11 % | 11 % | -29.2 % | 7 % | 15 % | -16.1 % |
| Net Average | +7.4 % | +12.0 % | +6.2 % | +6.0 % | ||
Predicted Capital Expenditures — 2023 versus 2022
Manufacturing
Purchasing and supply executives expect capital expenditures to increase 2.6 percent in 2023. The 33 percent of respondents who predict increased capital expenditures in 2023 indicate an average increase of 24.3 percent, while the 19 percent who said their capital spending would be reduced predict an average decrease of 28.3 percent. The remaining 48 percent said they expect to spend the same in 2023 as in 2022. The seven industries predicting increases in capital expenditures, at or above the average increase of 2.8 percent for 2023 — in the following order — are: Paper Products; Transportation Equipment; Petroleum & Coal Products; Food, Beverage & Tobacco Products; Machinery; Primary Metals; and Chemical Products.
Services
Services purchasing and supply executives are expecting an increase of 2.8 percent in capital expenditures in 2023, less than the 6 percent increase reported for 2022. The 38 percent of respondents expecting to spend more on capital expenditures predict an average increase of 15.9 percent. An additional 19 percent anticipate a decrease averaging 17 percent. Forty-three percent expect to spend the same on capital expenditures in 2023. The 11 industries expecting increases in capital expenditures in 2023 — listed in order of percentage increase — are: Accommodation & Food Services; Educational Services; Management of Companies & Support Services; Information; Mining; Real Estate, Rental & Leasing; Arts, Entertainment & Recreation; Wholesale Trade; Utilities; Public Administration; and Construction.
| Predicted Capital Expenditures 2023 vs. 2022 | |||||
| Manufacturing | Services | ||||
| Predicted
Dec 2022 |
Magnitude
of Change |
Predicted
Dec 2022 |
Magnitude
of Change |
||
| Higher | 33 % | +24.3 % | 38 % | +15.9 % | |
| Same | 48 % | NA | 43 % | NA | |
| Lower | 19 % | -28.3 % | 19 % | -17.0 % | |
| Net Average | +2.6 % | +2.8 % | |||
PRICES — Changes Between End of 2021 and End of 2022
Manufacturing
After an earlier forecast in May 2022 of an 11.1 percent increase in prices paid for raw materials in 2022, survey respondents report price increases averaging 11.4 percent for the year. The 86 percent who say their prices are higher now than at the end of 2021 report an average increase of 14.5 percent, while the 7 percent who report lower prices averaged a 16.4-percent decrease. The remaining 7 percent indicate no change in 2022. The eight industries experiencing price increases above the average of 11.4 percent in 2022 — listed in order — are: Printing & Related Support Activities; Food, Beverage & Tobacco Products; Machinery; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; Apparel, Leather & Allied Products; Primary Metals; and Chemical Products.
| Manufacturing Price Changes Between End of 2021 and End of 2022 | ||||||
| Predicted Dec 2021 | Magnitude
of Change |
Predicted May 2022 | Magnitude of Change | Reported
Dec 2022 |
Magnitude
of Change |
|
| Higher | 77 % | +12.1 % | 79 % | +14.3 % | 86 % | +14.5 % |
| Same | 12 % | NA | 19 % | NA | 7 % | NA |
| Lower | 11 % | -11.3 % | 2 % | -4.9 % | 7 % | -16.4 % |
| Net Average | +8.1 % | +11.1 % | +11.4 % | |||
Services
In 2022, services supply executives report prices paid increased by 11 percent. This is more than the 9.6-percent increase they predicted in May 2022, and also more than the 9.2-percent increase for 2022 predicted one year ago. Eighty-three percent of respondents report price increases averaging 13.7 percent. Four percent indicate decreased prices, with an average reduction of 8.6 percent, and 13 percent of respondents did not experience price changes this year. The nine industries experiencing price increases above the average of 11 percent in 2022 — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Mining; Arts, Entertainment & Recreation; Public Administration; Construction; Utilities; Real Estate, Rental & Leasing; Retail Trade; and Information.
| Services Price Changes Between End of 2021 and End of 2022 | ||||||
| Predicted Dec 2021 | Magnitude
of Change |
Predicted May 2022 | Magnitude of Change | Reported
Dec 2022 |
Magnitude
of Change |
|
| Higher | 84 % | +11.3 % | 76 % | +12.8 % | 83 % | +13.7 % |
| Same | 12 % | NA | 24 % | NA | 13 % | NA |
| Lower | 4 % | -6.4 % | 0 % | -50.0 % | 4 % | -8.6 % |
| Net Average | +9.2 % | +9.6 % | +11.0 % | |||
Prices – Predicted Changes Between End of 2022 and May 2023
Manufacturing
Fifty-six percent of purchasing and supply executives expect the prices they pay to increase in early 2023 by an average of 9.1 percent. At the same time, 21 percent anticipate decreases averaging 12.1 percent. Including the 23 percent who expect no change in prices in the first five months of 2023, respondents expect a net average overall price increase of 2.5 percent. The eight industries predicting a higher than 2.5 percent average increase in prices paid in the first part of 2023 — listed in order — are: Printing & Related Support Activities; Computer & Electronic Products; Apparel, Leather & Allied Products; Machinery; Transportation Equipment; Petroleum & Coal Products; Miscellaneous Manufacturing; and Nonmetallic Mineral Products.
Services
Services survey respondents predict purchases in the first five months of 2023 will cost an average of 5.4 percent more than at the end of 2022. This is less than the increase reported for calendar year 2022. Seventy percent of services respondents predict the prices they pay will increase an average of 8.7 percent in the first part of 2023. Eleven percent of respondents expect price decreases averaging 5.7 percent. The remaining 19 percent predict no change in prices in the first five months of 2023. The 10 industries predicting price increases of at least 5.4 percent on average in the first part of 2023 — listed in order of percentage increase — are: Arts, Entertainment & Recreation; Mining; Accommodation & Food Services; Other Services; Agriculture, Forestry, Fishing & Hunting; Real Estate, Rental & Leasing; Utilities; Health Care & Social Assistance; Construction; and Public Administration.
| Prices – Predicted Changes Between End of 2022 and May 2023 | |||||
| Manufacturing | Services | ||||
| Predicted
Dec 2022 |
Magnitude of Change | Predicted
Dec 2022 |
Magnitude
of Change |
||
| Higher | 56 % | +9.1 % | 70 % | +8.7 % | |
| Same | 23 % | NA | 19 % | NA | |
| Lower | 21 % | -12.1 % | 11 % | -5.7 % | |
| Net Average | +2.5 % | +5.4 % | |||
Prices — Predicted Changes Between End of 2022 and End of 2023
Manufacturing
Respondents predict a net average increase in prices paid of 2 percent between December 2022 and December 2023. Fifty percent of respondents expect an average price increase of 10.7 percent for the full year of 2023, while 28 percent expect an average reduction of 12.1 percent. The remaining 23 percent expect no change in their average prices paid for the year 2023. The seven industries expecting price increases above the predicted average of 2 percent by the end of 2023 — listed in order — are: Apparel, Leather & Allied Products; Printing & Related Support Activities; Machinery; Computer & Electronic Products; Textile Mills; Miscellaneous Manufacturing; and Petroleum & Coal Products.
Services
For all of 2023, services supply management executives expect their prices to increase an average of 8.4 percent. Seventy-three percent of respondents expect increases averaging 12.4 percent, 11 percent anticipate prices to drop an average of 6.6 percent, and 16 percent foresee no change in prices during the next year. The nine industries expecting greater than the 8.4-percent average price increase by the end of 2023 — listed in order of percentage increase — are: Arts, Entertainment & Recreation; Real Estate, Rental & Leasing; Mining; Agriculture, Forestry, Fishing & Hunting; Construction; Public Administration; Information; Health Care & Social Assistance; and Other Services.
| Predicted Price Changes Between End of 2022 and End of 2023 | |||||
| Manufacturing | Services | ||||
| Predicted
Dec 2022 |
Magnitude
of Change |
Predicted
Dec 2022 |
Magnitude
of Change |
||
| Higher | 50 % | +10.7 % | 73 % | +12.4 % | |
| Same | 23 % | NA | 16 % | NA | |
| Lower | 28 % | -12.1 % | 11 % | -6.6 % | |
| Net Average | +2.0 % | +8.4 % | |||
Labor And Benefit Costs — Predicted Rate Change End of 2022 vs. End of 2023
Manufacturing
Purchasing and supply executives expect higher overall labor and benefit costs for 2023. Seventy-six percent of respondents expect labor and benefit costs to grow by an average of 8.5 percent for all of 2023, while the 3 percent forecasting lower costs see them decreasing by an average of 21 percent. Including the 21 percent of respondents who believe costs will remain the same, the overall net rate of increase is expected to be 5.8 percent for the year. The nine industries expecting to pay an increase of 5.8 percent or greater — listed in order of percentage increase — are: Plastics & Rubber Products; Chemical Products; Primary Metals; Apparel, Leather & Allied Products; Printing & Related Support Activities; Wood Products; Nonmetallic Mineral Products; Machinery; and Fabricated Metal Products.
Services
Services purchasing and supply executives expect a 3.5-percent increase in labor and benefit costs in 2023. Sixty-six percent of respondents expect such costs to increase by an average of 6.8 percent. Another 11 percent of respondents expect labor and benefit costs to shrink by an average of 8.9 percent, and 23 percent believe costs will remain stable during 2023. The 13 industries expecting to pay an increase of 3.5 percent or higher — listed in order of percentage increase — are: Accommodation & Food Services; Arts, Entertainment & Recreation; Agriculture, Forestry, Fishing & Hunting; Other Services; Professional, Scientific & Technical Services; Health Care & Social Assistance; Mining; Public Administration; Finance & Insurance; Construction; Utilities; Wholesale Trade; and Retail Trade.
| Labor and Benefit Costs — Predicted Rate Change End of 2022 vs. End of 2023 | ||||||
| Manufacturing | Services | |||||
| Predicted for 2022Dec 2021 | Predicted for 2023Dec 2022 | Magnitude
of Change |
Predicted for 2022Dec 2021 | Predicted for 2023Dec 2022 | Magnitude
of Change |
|
| Higher | 73 % | 76 % | +8.5 % | 72 % | 66 % | +6.8 % |
| Same | 25 % | 21 % | NA | 25 % | 23 % | NA |
| Lower | 2 % | 3 % | -21.0 % | 3 % | 11 % | -8.9 % |
| Net Average | +4.7 % | +5.8 % | +6.1 % | +3.5 % | ||
Employment — Change in Overall Employment
Manufacturing
ISM’s Manufacturing Business Survey Committee members report that sector employment increased 2.8 percent in 2022 and forecast that employment will increase by 3.9 percent, on average, for the full year of 2023. Forty-two percent of respondents expect employment to be, on average, 12.8 percent higher in 2023, while 9 percent predict employment to be lower by an average of 15.7 percent. The remaining 49 percent of respondents expect their employment levels to be unchanged in 2023. The 13 industries predicting increases in employment in 2023 — listed in order — are: Apparel, Leather & Allied Products; Plastics & Rubber Products; Fabricated Metal Products; Petroleum & Coal Products; Furniture & Related Products; Machinery; Primary Metals; Food, Beverage & Tobacco Products; Paper Products; Miscellaneous Manufacturing; Chemical Products; Transportation Equipment; and Nonmetallic Mineral Products.
| Manufacturing Change in Overall Employment | ||||||
| Reported for 2022 (since May)Dec 2022 | Magnitude
of Change |
Reported
for 2022 (since Dec 2021) |
Magnitude
of Change |
Predicted for 2023Dec 2022 | Magnitude
of Change |
|
| Higher | 37 % | +8.2 % | 36 % | +13.0 % | 42 % | +12.8 % |
| Same | 42 % | NA | 44 % | NA | 49 % | NA |
| Lower | 21 % | -10.3 % | 20 % | -9.5 % | 9 % | -15.7 % |
| Net Average | +0.8 % | +2.8 % | +3.9 % | |||
Services
ISM’s Services Business Survey Committee members report that sector employment has decreased 2.3 percent since May 2022, but increased 0.2 percent for all of 2022. They forecast that employment will increase 1 percent by the end of 2023. In the coming year, 40 percent of respondents expect higher levels of employment (up 6.9 percent on average), 19 percent anticipate lower levels (down 8.8 percent on average), and 41 percent expect their employment levels to be unchanged. The 14 industries anticipating increases in employment in 2023 — listed in order — are: Transportation & Warehousing; Professional, Scientific & Technical Services; Construction; Mining; Other Services; Accommodation & Food Services; Utilities; Arts, Entertainment & Recreation; Public Administration; Wholesale Trade; Retail Trade; Agriculture, Forestry, Fishing & Hunting; Educational Services; and Information.
| Services Change in Overall Employment | ||||||
| Reported for 2022 (since May)Dec 2022 | Magnitude
of Change |
Reported
for 2022 (since Dec 2021) |
Magnitude
of Change |
Predicted for 2023Dec 2022 | Magnitude
of Change |
|
| Higher | 27 % | +8.2 % | 36 % | +9.3 % | 40 % | +6.9 % |
| Same | 44 % | NA | 37 % | NA | 41 % | NA |
| Lower | 29 % | -15.6 % | 27 % | -11.7 % | 19 % | -8.8 % |
| Net Average | -2.3 % | +0.2 % | +1.0 % | |||
Export Business — Predicted Change for Next Half Year (First Half of 2023)
Manufacturing
Survey responses indicate executives expect increases in new export orders for the first half of 2023. Of the 63 percent of respondents who reported export activity, 34 percent predict an increase (32 percent moderate and 2 percent substantial) over the next six months. Fourteen percent of respondents predict a decrease (13 percent moderate and 1 percent substantial) in their exports, and 52 percent anticipate no change in exports over the next six months. The nine industries expecting growth in exports during the first half of 2023 — listed in order — are: Printing & Related Support Activities; Paper Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Computer & Electronic Products; Transportation Equipment; Chemical Products; Plastics & Rubber Products; and Machinery.
Services
For the first half of 2023, respondents whose organizations provide services outside the U.S. are more optimistic concerning business. Of the 21 percent of Services Business Survey Committee respondents who report that they export, 37 percent predict an increase (37 percent moderate and 0 percent substantial) over the next six months. Three percent of the respondents expect a decrease in their exports (2 percent moderate and 1 percent substantial), and 60 percent anticipate no change in exports over the next six months. Of the industries that export, the six that expect growth in the first half of 2023 — listed in order — are: Real Estate, Rental & Leasing; Construction; Information; Mining; Finance & Insurance; and Professional, Scientific & Technical Services.
| Predicted Change in Export Business — Next Half Year | ||||
| Manufacturing | Services | |||
| Predicted For 2022 | Predicted
For 2023 |
Predicted For 2022 | Predicted For 2023 | |
| First Half of 2022Predicted Dec 2021 | First Half of 2023Predicted Dec 2022 | First Half of 2022Predicted Dec 2021 | First Half of 2023Predicted Dec 2022 | |
| Substantial Increase | 3 % | 2 % | 2 % | 0 % |
| Moderate Increase | 46 % | 32 % | 18 % | 37 % |
| No Change | 45 % | 52 % | 76 % | 60 % |
| Moderate Decrease | 5 % | 13 % | 4 % | 2 % |
| Substantial Decrease | 1 % | 1 % | 0 % | 1 % |
| Diffusion Index | 71.4 % | 59.9 % | 58.1 % | 67.2 % |
Import Business — Predicted Change for Next Half Year (First Half of 2023)
Manufacturing
Respondents expect increases in imports in the first half of 2023. Of the 71 percent of purchasers who reported they import materials, 29 percent predict an increase over the next six months (25 percent moderate and 4 percent substantial), while 18 percent predict a decrease (15 percent moderate and 3 percent substantial). The remaining 54 percent of survey respondents expect no change in imports in the first half of 2023. The 11 industries expecting growth in imports — listed in order — are: Printing & Related Support Activities; Apparel, Leather & Allied Products; Paper Products; Textile Mills; Nonmetallic Mineral Products; Transportation Equipment; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Machinery; Chemical Products; and Computer & Electronic Products.
Services
Services executives’ expectations for the use of imports for the first half of 2023 have declined compared to their expectations in December 2021 for the first half of 2022. Of the 35 percent of services organizations who reported they import materials and services, 26 percent (17 percent moderate and 9 percent substantial) predict an increase during the first half of 2023. Seventeen percent of respondents (15 percent moderate and 2 percent substantial) predict a decrease. The remaining 57 percent expect no change in imports over the next six months. The eight industries expecting growth in imports — listed in order — are: Management of Companies & Support Services; Mining; Utilities; Professional, Scientific & Technical Services; Finance & Insurance; Educational Services; Information; and Health Care & Social Assistance.
| Predicted Change in Import Business — Next Half Year | ||||
| Manufacturing | Services | |||
| Predicted For 2022 | Predicted
For 2023 |
Predicted For 2022 | Predicted For 2023 | |
| First Half
of 2022Predicted
Dec 2021 |
First Half of 2023Predicted Dec 2022 | First Half
of 2022Predicted
Dec 2021 |
First Half of 2023Predicted Dec 2022 | |
| Substantial Increase | 6 % | 4 % | 4 % | 9 % |
| Moderate Increase | 35 % | 25 % | 26 % | 17 % |
| No Change | 47 % | 54 % | 52 % | 57 % |
| Moderate Decrease | 10 % | 15 % | 9 % | 15 % |
| Substantial Decrease | 2 % | 3 % | 9 % | 2 % |
| Diffusion Index | 64.8 % | 55.5 % | 56.6 % | 54.7 % |
Inventory-To-Sales Ratio
Manufacturing
Of the manufacturing panel, 25 percent anticipate increasing their purchased inventory-to-sales ratio during 2023. An additional 20 percent expect their ratio to drop, and 55 percent see no change. The diffusion index of 52.3 percent suggests the inventory-to-sales ratio will increase in 2023.
Services
Twelve percent anticipate increasing their purchased inventory-to-sales ratio during 2023. An additional 18 percent expect their ratio to drop, and 70 percent see no change. The diffusion index of 46.7 percent suggests the inventory-to-sales ratio will decrease in 2023.
| Predicted Change in Purchased Inventory-to-Sales Ratio | ||||
| Manufacturing | Services | |||
| For 2022
Predicted Dec 2021 |
For 2023
Predicted Dec 2022 |
For 2022
Predicted Dec 2021 |
For 2023
Predicted Dec 2022 |
|
| Greater | 33 % | 25 % | 17 % | 12 % |
| Same | 49 % | 55 % | 68 % | 70 % |
| Smaller | 18 % | 20 % | 15 % | 18 % |
| Diffusion Index | 57.9 % | 52.3 % | 51.5 % | 46.7 % |
Note: A diffusion index above 50 percent would indicate an increase in the inventory-to-sales ratio; below 50 percent, a decrease in the ratio.
U.S. Dollar — Predicted Strength vs. Major Trading Currencies — in 2023 — Manufacturing Only
Manufacturing
Purchasing and supply executives are expecting the U.S. dollar will generally strengthen in 2023 against all the foreign currencies listed below. The average diffusion index for this forecast is 63.8 percent, an increase of 19 percentage points compared to the December 2021 forecast average of 44.8 percent for 2022.
| U.S. Dollar Will Be: | Euro | Canada Dollar | British
Pound |
Japanese
Yen |
Mexican
Peso |
Korean Won | Taiwan
New Dollar |
| Stronger than | 54 % | 42 % | 49 % | 43 % | 50 % | 41 % | 32 % |
| Same as | 26 % | 43 % | 33 % | 35 % | 37 % | 46 % | 51 % |
| Weaker than | 20 % | 15 % | 19 % | 22 % | 13 % | 13 % | 17 % |
| Diffusion Index | 66.6 % | 63.3 % | 64.9 % | 61.0 % | 68.9 % | 64.1 % | 57.6 % |
Note: A diffusion index above 50 percent would predict a generally stronger U.S. dollar; below 50 percent, a generally weaker U.S. dollar, with the distance from 50 percent indicative of the predicted strength or weakness.
Business Revenues
Business Revenues Comparison — 2022 versus 2021
Manufacturing
Overall, revenues increased for manufacturers. Sixty percent of respondents say revenue was better than 2021, increasing on average 17.7 percent. Twelve percent say their revenues decreased in 2022 by an average of 11.3 percent, and the remaining 28 percent indicate no change. Overall, purchasing and supply executives indicate a net increase of 9.3 percent in business revenues for 2022 over 2021. This is slightly more than the 9.2-percent increase that was forecast in May 2022 for all of 2022 and more than the 6.5-percent increase predicted in December 2021 for all of 2022. The 15 industries reporting increases in revenues in 2022 — listed in order — are: Printing & Related Support Activities; Petroleum & Coal Products; Apparel, Leather & Allied Products; Fabricated Metal Products; Plastics & Rubber Products; Computer & Electronic Products; Primary Metals; Transportation Equipment; Chemical Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Wood Products; Paper Products; Machinery; and Electrical Equipment, Appliances & Components.
| Manufacturing Business Revenues — 2022 vs. 2021 | ||||||
| Predicted
Dec 2021 |
% Change | Predicted
May 2022 |
% Change | Reported
Dec 2022 |
% Change | |
| Higher | 65 % | +11.6 % | 63 % | +15.5 % | 60 % | +17.7 % |
| Same | 24 % | NA | 30 % | NA | 28 % | NA |
| Lower | 11 % | -10.5 % | 7 % | -10.0 % | 12 % | -11.3 % |
| Net Average | +6.5 % | +9.2 % | +9.3 % | |||
Services
Services supply management executives report that business revenues for 2022 increased compared to 2021 by 2.1 percent. This is less than the 4.9-percent increase predicted for the year in May 2022. The 47 percent of respondents reporting better business in 2022 than in 2021 estimate an average revenue increase of 9.1 percent. This contrasts with an average decrease of 12.3 percent reported by the 18 percent of respondents who indicate worse business in 2022. The remaining 35 percent have experienced no change in 2022. The 13 industries reporting increases in revenues in 2022 are: Wholesale Trade; Transportation & Warehousing; Construction; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Mining; Agriculture, Forestry, Fishing & Hunting; Accommodation & Food Services; Utilities; Other Services; Educational Services; Finance & Insurance; and Management of Companies & Support Services.
| Services Business Revenues — 2022 vs. 2021 | ||||||
| Predicted
Dec 2021 |
% Change | Predicted
May 2022 |
% Change | Reported
Dec 2022 |
% Change | |
| Higher | 54 % | +12.5 % | 48 % | +13.4 % | 47 % | +9.1 % |
| Same | 34 % | NA | 40 % | NA | 35 % | NA |
| Lower | 12 % | -21.0 % | 12 % | -11.4 % | 18 % | -12.3 % |
| Net Average | +4.3 % | +4.9 % | +2.1 % | |||
Business Revenues Prediction for 2023
Manufacturing
Manufacturing survey respondents forecast that business revenues for 2023 will be stronger than in 2022. The 45 percent of respondents forecasting better organizational business revenues in 2023 estimate an average increase of 14.9 percent. This contrasts with an average decrease of 10.3 percent forecast by the 12 percent who predict lower business revenues in 2023. Including the 43 percent who see no change in 2023, the forecast for overall net increase in business revenues for 2023 is 5.5 percent. Fifteen of the 18 manufacturing industries expect revenue improvement in 2023, listed in order of largest to smallest projected increase: Plastics & Rubber Products; Transportation Equipment; Apparel, Leather & Allied Products; Fabricated Metal Products; Primary Metals; Food, Beverage & Tobacco Products; Printing & Related Support Activities; Furniture & Related Products; Machinery; Chemical Products; Computer & Electronic Products; Miscellaneous Manufacturing; Paper Products; Electrical Equipment, Appliances & Components; and Textile Mills.
Services
Services survey respondents forecast that business revenues for 2023 will improve by an average of 3.1 percent. This is more than the 2.1-percent increase reported for 2022, and less than the 4.3-percent increase predicted one year ago for 2022 revenues. The 50 percent of respondents forecasting better business in 2023 estimate an average revenue increase of 8.2 percent. This contrasts with an average decrease of 9.4 percent forecast by the 11 percent who predict worse business in 2023. The remaining 39 percent see no change. The 14 industries expecting revenue increases in 2023 — listed in order of largest to smallest projected increase — are: Transportation & Warehousing; Mining; Professional, Scientific & Technical Services; Management of Companies & Support Services; Accommodation & Food Services; Real Estate, Rental & Leasing; Retail Trade; Utilities; Construction; Public Administration; Information; Finance & Insurance; Educational Services; and Other Services.
| Business Revenues — 2023 vs. 2022 | |||||
| Manufacturing | Services | ||||
| Predicted
Dec 2022 |
% Change | Predicted
Dec 2022 |
% Change | ||
| Higher | 45 % | +14.9 % | 50 % | +8.2 % | |
| Same | 43 % | NA | 39 % | NA | |
| Lower | 12 % | -10.3 % | 11 % | -9.4 % | |
| Net Average | +5.5 % | +3.1 % | |||
Profit Margins
Manufacturing
Survey respondents report that profit margins increased on average during the second and third quarters of 2022, as 33 percent experienced an increase in profit margins, 29 percent had lower margins, and 38 percent reported no change. Expectations are higher between now and May 2023, as 34 percent of respondents forecast better profit margins, 19 percent predict lower profit margins, and 47 percent predict no change. The 13 industries expecting an increase in profit margins through May 2023 — listed in order of percentage increase — are: Printing & Related Support Activities; Electrical Equipment, Appliances & Components; Wood Products; Petroleum & Coal Products; Nonmetallic Mineral Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Plastics & Rubber Products; Fabricated Metal Products; Primary Metals; Machinery; Transportation Equipment; and Chemical Products.
Services
Among services supply management executives, 21 percent indicated their organizations experienced an increase in profit margins during the second and third quarters of 2022, 34 percent found smaller profit margins, and 45 percent had no change in margins during the same period. From now through May 2023, 21 percent of supply managers expect improved profit margins, 30 percent expect lower profit margins, and the remaining 49 percent of respondents anticipate no change. The three industries expecting an increase in profit margins through May 2023 are: Management of Companies & Support Services; Accommodation & Food Services; and Professional, Scientific & Technical Services.
| Profit Margins | ||||
| Manufacturing | Services | |||
| May 2022 through Dec 2022Reported Dec 2022 | Dec 2022 through May 2023Predicted Dec 2022 | May 2022 through Dec 2022Reported Dec 2022 | Dec 2022 through May 2023Predicted Dec 2022 | |
| Better | 33 % | 34 % | 21 % | 21 % |
| Same | 38 % | 47 % | 45 % | 49 % |
| Worse | 29 % | 19 % | 34 % | 30 % |
| Diffusion Index | 51.7 % | 57.2 % | 43.4 % | 45.9 % |
Business Comparison
The First Half of 2023 Compared with the Last Half of 2022
Manufacturing
Manufacturing survey respondents are pessimistic about the next six months, as reflected in the diffusion index reading of 47.7 percent. Comparing their outlook for the first half of 2023 to the last half of 2022, 24 percent predict it will be better, 28 percent predict it will be worse, and 48 percent expect no change. The eight industries expecting improvement in the first half of 2023 — listed in order — are: Printing & Related Support Activities; Apparel, Leather & Allied Products; Primary Metals; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Fabricated Metal Products; Electrical Equipment, Appliances & Components; and Machinery.
Services
The first half of 2023 is predicted to be better than the last half of 2022, according to services purchasing and supply executives. The diffusion index indicating current expectations registered 55.8 percent. Twenty-nine percent of respondents expect the first half of next year to be better than the last half of 2022. Seventeen percent anticipate it will be worse, and 53 percent predict no change. The 10 industries expecting improvement in the first half of 2023 — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Public Administration; Management of Companies & Support Services; Professional, Scientific & Technical Services; Accommodation & Food Services; Educational Services; Other Services; Information; Transportation & Warehousing; and Utilities.
| Business — First Half 2023 vs. Last Half 2022 | ||
| Manufacturing | Services | |
| Predicted
Dec 2022 |
Predicted
Dec 2022 |
|
| Better | 24 % | 29 % |
| Same | 48 % | 53 % |
| Worse | 28 % | 17 % |
| Diffusion Index | 47.7 % | 55.8 % |
Note: A diffusion index above 50 percent would generally indicate an expectation of the first half of the coming year being better than the second half of the current year.
The Second Half of 2023 Compared with the First Half of 2023
Manufacturing
In contrast, purchasing and supply executives are optimistic about the second half of 2023 compared to the first half. The percentage of survey respondents who forecast the second half of 2023 to be better than the first half is 32 percent, while 18 percent expect it to be worse, and 49 percent expect no change. The diffusion index figure for the second half of 2023 is 57 percent, compared to 47.7 percent for the first half of 2023. The 12 industries predicting improvement in the second half of 2023 — listed in order — are: Printing & Related Support Activities; Paper Products; Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Miscellaneous Manufacturing; Chemical Products; Primary Metals; Textile Mills; Fabricated Metal Products; Computer & Electronic Products; and Machinery.
Services
Services purchasing and supply executives feel more optimistic about the second half of 2023 as compared to the first half of the year. (The diffusion index reading for the second half is 61.7 percent; it is 55.8 percent for the first half.) The percentage of respondents who currently forecast the second half of 2023 to be better than the first half is 39 percent, while 16 percent expect it to be worse. An additional 45 percent of purchasers expect no change. The 14 industries expecting improvement in the second half of 2023 — listed in order — are: Accommodation & Food Services; Arts, Entertainment & Recreation; Retail Trade; Information; Real Estate, Rental & Leasing; Finance & Insurance; Professional, Scientific & Technical Services; Transportation & Warehousing; Public Administration; Other Services; Educational Services; Construction; Utilities; and Health Care & Social Assistance.
| Business — Second Half 2023 vs. First Half 2023 | ||
| Manufacturing | Services | |
| Predicted
Dec 2022 |
Predicted
Dec 2022 |
|
| Better | 32 % | 39 % |
| Same | 49 % | 45 % |
| Worse | 18 % | 16 % |
| Diffusion Index | 57.0 % | 61.7 % |
Note: A diffusion index above 50 percent would generally indicate an expectation of the second half of the coming year being better than the first half.
Outlook For The Next 12 Months
Manufacturing
Compared to the outlook for 2022 reported in December 2021, survey respondents this year are less optimistic about the outlook for 2023. Twenty-seven percent of respondents believe 2023 will be better than 2022. Forty-six percent of respondents believe 2023 will be the same as 2022, and 27 percent believe 2023 will be worse than 2022. The resulting diffusion index for the 2023 outlook is 50 percent, compared with 66.2 percent for 2022 from one year ago.
Services
Services survey respondents are overall less optimistic, compared to their predictions for 2022. A smaller proportion of respondents this year believe 2023 will be better than 2022. The diffusion index looking forward into 2023 of 55.6 percent is lower than the diffusion index looking forward into 2022 (63.3 percent).
| Outlook — Next 12 Months | ||||
| Manufacturing | Services | |||
| Predicted for 2022 Dec 2021 | Predicted for 2023 Dec 2022 | Predicted for 2022 Dec 2021 | Predicted for 2023 Dec 2022 | |
| Better | 46 % | 27 % | 47 % | 31 % |
| Same | 40 % | 46 % | 33 % | 50 % |
| Worse | 14 % | 27 % | 20 % | 19 % |
| Diffusion Index | 66.2 % | 50.0 % | 63.3 % | 55.6 % |
Special Question Topic #1: Hiring Workers To Fill Open Positions
We asked the panel, “In the past six months, has your firm had difficulty hiring workers to fill open positions?”
Respondents indicated:
| Hiring Workers to Fill Open Positions | ||||||
| Manufacturing | Services | |||||
| Reported Dec 2019 | Reported Dec 2021 | Reported Dec 2022 | Reported Dec 2019 | Reported Dec 2021 | Reported Dec 2022 | |
| We have had difficulty hiring | 70.3 % | 81 % | 77 % | 69.4 % | 81 % | 84 % |
| We have not had difficulty | 23.1 % | 12 % | 21 % | 24.0 % | 13 % | 10 % |
| Not applicable (we have not had any open positions) | 6.5 % | 7 % | 1 % | 6.6 % | 6 % | 6 % |
Special Question Topic #2: Hiring Difficulties
Manufacturing
We asked the panel, “If ‘yes,’ what have you done to deal with these difficulties?”
- We raised wages (or used other forms of monetary compensation) to recruit new hires (45%)
- We didn’t hire/were not able to hire as many workers as we would have liked (34%)
- We lowered our hiring standards (10%)
- We didn’t have difficulty hiring because we weren’t trying to hire new workers (3%)
- Something else (8%)
Services
We asked the panel, “If ‘yes,’ what have you done to deal with these difficulties?”
- We raised wages (or used other forms of monetary compensation) to recruit new hires (51%)
- We didn’t hire/were not able to hire as many workers as we would have liked (32%)
- We lowered our hiring standards (7%)
- Something else (10%)
Special Questions Topic #3: No Hiring Difficulties
Manufacturing
We asked the panel, “If you have not had difficulty hiring, why not?”
- We raised wages in order to attract the applicants we needed (27%)
- The local labor market is not that tight; it was easy to find an ample supply of applicants (17%)
- We didn’t have difficulty hiring because we weren’t trying to hire new workers (16%)
- We lowered our hiring standards (9%)
- Something else (31%)
Services
We asked the panel, “If you have not had difficulty hiring, why not?”
- We raised wages in order to attract the applicants we needed (45%)
- We didn’t have difficulty hiring because we weren’t trying to hire new workers (17%)
- We lowered our hiring standards (13%)
- The local labor market is not that tight; it was easy to find an ample supply of applicants (5%)
- Something else (20%)
Special Question Topic #4: Supply Chain Problems
We asked the panel, “Do you anticipate supply chain problems for the first quarter/second quarter to be better, same or worse?”
Respondents indicated:
| Manufacturing | ||||
| Predicted Dec 2021 | Predicted Dec 2022 | |||
| Q1
2022 |
Q2
2022 |
Q1
2023 |
Q2
2023 |
|
| Better | 5 % | 30 % | 35 % | 52 % |
| Same | 47 % | 40 % | 55 % | 43 % |
| Worse | 48 % | 30 % | 9 % | 5 % |
| Diffusion Index | 28.5 % | 50.1 % | 63.0 % | 73.1 % |
| Services | ||||
| Predicted Dec 2021 | Predicted Dec 2022 | |||
| Q1
2022 |
Q2
2022 |
Q1
2023 |
Q2
2023 |
|
| Better | 8 % | 21 % | 32 % | 40 % |
| Same | 46 % | 46 % | 55 % | 43 % |
| Worse | 46 % | 33 % | 12 % | 17 % |
| Diffusion Index | 30.6 % | 43.7 % | 59.9 % | 61.6 % |
Special Question #5: Ability To Pass Pricing Increases
Manufacturing
We asked the panel, “Are you able to pass price increases through to the customer?”
- Yes (72%)
- No (28%)
Services
We asked the panel, “Are you able to pass price increases through to the customer?”
- Yes (48%)
- No (52%)
Special Question Topic #6: Cause of Supply Chain Disruptions
We asked the panel, “Are most of the supply chain disruptions in the manufacturing/services sectors due to foreign developments (for example, microchips or other foreign-sourced supplies) or to domestic developments (such as, port delays or lack of truck drivers or domestically-produced supplies like steel or aluminum)?”
Respondents indicated:
Manufacturing
- Foreign-Sourced (56%)
- Domestic-Sourced (44%)
Services
- Foreign-Sourced (49%)
- Domestic-Sourced (51%)
Special Question Topic #7: Level of Backorders Supporting Production
We asked the panel, “How do you see your current level of backorders as supporting your production presently and over the new few months?”
Respondents indicated:
Manufacturing
- The level of backorders should not have meaningful effects on production or business activity. (52%)
- The level of backorders should provide a small boost to production or business activity. (26%)
- The level of backorders should provide a large boost to production or business activity. (9%)
- Declining backorders should provide a drag on production or business activity. (12%)
Services
- The level of backorders should not have meaningful effects on production or business activity. (56%)
- The level of backorders should provide a small boost to production or business activity. (25%)
- The level of backorders should provide a large boost to production or business activity. (4%)
- Declining backorders should provide a drag on production or business activity. (15%)
Special Question Topic #8: Reshoring from China
We asked the panel, “In the past six months, has your organization been impacted by reshoring production from China?”
Respondents indicated:
Manufacturing
- Yes, either my organization or my suppliers are actively substituting domestic production for production or imports from China. (42%)
- No, neither my organization nor my suppliers are affected by reshoring from China. (40%)
- No, but either my organization or my suppliers are substituting production to other (non-U.S.) locations for production or imports from China. (18%)
Services
- Yes, either my organization or my suppliers are actively substituting domestic production for production or imports from China. (26%)
- No, neither my organization nor my suppliers are affected by reshoring from China. (49%)
- No, but either my organization or my suppliers are substituting production to other (non-U.S.) locations for production or imports from China. (25%)
Summary
Manufacturing
The manufacturing sector contracted in November, and the forecast indicates that this may continue in the first half of 2023, but improve in the second half.
- Operating rate is currently at 88.4 percent.
- Production capacity increased by 6.7 percent in 2022.
- Production capacity is expected to increase by 5.3 percent in 2023.
- Capital expenditures increased 12 percent in 2022.
- Capital expenditures are expected to increase 2.6 percent in 2023.
- Prices paid increased 11.4 percent in 2022.
- Overall, 2023 prices paid are expected to increase 2 percent.
- Labor and benefit costs are expected to increase 5.8 percent in 2023.
- Manufacturing employment is predicted to increase 3.9 percent in 2023.
- U.S. exports growth expected in 2023.
- U.S. imports growth expected in 2023.
- Manufacturing revenues increased 9.3 percent in 2022.
- Manufacturing revenues are expected to increase 5.5 percent in 2023.
- The U.S. dollar is expected to strengthen versus the currencies of seven major trading partners in 2023.
- Manufacturing supply managers have a mixed outlook, with 27 percent of respondents predicting 2023 will be better than 2022 and 27 percent of respondents predicting 2023 will be worse than 2022.
Services
- The services sector continues to expand, and the forecast indicates continued expansion in 2023.
- Operating rate is currently at 89.9 percent.
- Production capacity increased 3.9 percent in 2022.
- Production and provision capacity is expected to increase 3.4 percent in 2023.
- Capital expenditures increased 6 percent in 2022.
- Capital expenditures are expected to increase 2.8 percent in 2023.
- Prices paid increased 11 percent in 2022.
- Prices paid are expected to increase 8.4 percent in 2023.
- Labor and benefit costs are expected to increase 3.5 percent in 2023.
- Employment is expected to increase 1 percent in 2023.
- Export levels expected to increase in 2023.
- Import growth expected in 2023.
- Services revenues are up 2.1 percent in 2022.
- Services revenues are expected to rise 3.1 percent in 2023.
- Services supply managers are positive in their outlook, with 31 percent of respondents predicting 2023 will improve compared to 2022.
*Miscellaneous Manufacturing includes items such as medical equipment and supplies, jewelry, sporting goods, toys and office supplies.
**Other Services include services such as equipment and machinery repairing; promoting or administering religious activities; grant making; advocacy; and providing dry-cleaning and laundry services, personal care services, death care services, pet care services, photofinishing services, temporary parking services, and dating services.
Posted: December 15, 2022
Source: Institute for Supply Management
