U.S. Factories Are Less Upbeat on 2019 Sales on Hiring, Tariffs
Around 55 percent of producers expect higher 2019 revenue, down from 64 percent in December.
(Bloomberg) -- U.S. manufacturers remain upbeat about sales this year, though less so than before as a majority say hiring remains difficult and tariffs have raised prices.
Fifty-five percent of producers expect higher 2019 revenue, down from 64 percent in December, an Institute for Supply Management survey showed Wednesday. Service providers were less optimistic, with the share forecasting sales gains falling to 47 percent from 57 percent, according to the poll of purchasing and supply executives that participate in ISM’s monthly surveys.
Key Insights
- The dimmer outlooks follow ISM’s two main indexes cooling last month, with the manufacturing gauge falling to a two-year low while the services index was the weakest since 2017. Those readings remained expansionary but contrasted with unexpectedly strong figures for first-quarter economic growth and April payroll gains.
- Among manufacturers, 59 percent said tariffs have raised prices of goods produced, while just 36 percent of services companies said the levies had increased costs. Majorities of both said tariffs haven’t caused supply chain delays or disruptions.
- More than half of companies expect employment to be unchanged for the rest of 2019, while around three-quarters reported having difficulty hiring for open jobs, the latest evidence that the U.S. labor market remains generally tight. Just over half of manufacturers had raised wages to recruit new hires in the past six months, while just under half of services respondents did so.
- “Manufacturing continues to move in a positive direction,” Timothy Fiore, chair of the factory survey committee, said in a statement. “However, finding and onboarding qualified labor and being able to pass on raw material price increases will ultimately define manufacturing revenues and profitability.”
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- Among 18 manufacturing industries, printing was the only one projecting a drop in revenue, while retail was the only one of 18 services sectors projecting sales would decline. The National Retail Federation forecast in February that sales growth in the U.S. will slow in 2019.
- Manufacturers on average expect 2019 revenue to increase by 4 percent, down from 5.7 percent in the December survey.
To contact the reporter on this story: Reade Pickert in Washington at epickert@bloomberg.net
To contact the editors responsible for this story: Scott Lanman at slanman@bloomberg.net, Jeff Kearns, Alister Bull
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