A new forecast by the Institute for Supply Management published in the ‘Spring 2020 Semiannual Economic Forecast’ indicates that in the US manufacturing, revenue, capital expenditures and utilization are all expected to contract substantially this year due to the coronavirus pandemic.
However, the same survey reveals a surprisingly buoyant outlook for US apparel and leather industry for the rest of 2020. This upbeat outlook mainly stems from the ability of these two industries to divert their production to the manufacturing of PPE when the pandemic forced their stores to close and orders dwindle, and the potential for new core business now that retail is beginning to reopen.
Textile production to decline by 3.6 per cent
The survey states, non-manufacturing industries including agriculture, transportation, warehousing and retailer are likely to record a 10.4 per cent net decrease in their overall revenues. The capacity of these industries to produce products or provide services is expected to decrease 2.8 per cent during 2020.
In terms of manufacturing industries, the production capacities of 11 industries including textile mills is expected to decrease by 3.6 per cent in 2020. On the contrary, production capacities of five manufacturing industries are expected to increase in 2020. These industries include apparel, leather and allied products. Their capital expenditures is also expected to increase in 2020 compared to 2019.
Apparel prices to decrease by 2.8 per cent
In the December forecast, respondents had predicted a 0.4 per cent increase in prices they paid for products during the first four months of 2020. The industries that they reported an increase in prices included textile mills. These respondents now report a 2.8 decrease in prices in 14 industries that also include apparel, leather and allied products.
The prices of products in seven manufacturing industries including textile mills expect their prices to increase in 2020, while 11 industries including apparel, leather and allied products expect prices to decrease.
In non-manufacturing business, executives expect prices to increase on an average, 3.9 per cent as compared to prices at the end of 2019. The 11 industries predicting price increases for all of 2020 include wholesale trade, and transportation and warehousing, while among the seven industries expecting price decreases for 2020 were agriculture and retail trade.
Apparel revenues to grow, textile to contract
Apparel, leather and allied industries also expect their revenues to grow in 2020. On the other hand, revenues of 15 manufacturing industries including textile mills are expected to contract. The revenues of 18 non-manufacturing industries including agriculture, transportation and warehousing; retail trade and wholesale trade are also expected to fall.
The revenues of purchasing and supply management executives in manufacturing business are expected to contract by 10.3 percent. This is 15.1 percent lower than the 4.8 percent increase forecast in December.