1 2011 semiannual forecast report december 6, 2011 ism business survey committees
TRANSCRIPT
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2011 Semiannual 2011 Semiannual Forecast ReportForecast Report
December 6, 2011ISM Business Survey Committees
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Speakers
Bradley J. Holcomb, CPSM, CPSD, chair of the ISM Manufacturing Business Survey Committee
Anthony S. Nieves, C.P.M., CFPM, chair of the ISM Non-Manufacturing Business Survey Committee
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PMI 2002 - November 2011
2002 - November 2011
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NMI 2008 - November 2011
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Non-Manufacturing Business Activity 2002 – November 2011
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Current Operating Rate
Percent of Normal Capacity
December 2011 79.2%April 2011 83.2%December 2010 80.2%
December 2011 85.2%April 2011 83.7%December 2010 82.9%
ManufacturingManufacturing
Non-ManufacturingNon-Manufacturing
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Production Capacity ChangeReported 2011 vs. 2010
Production Capacity Dec 2011
Mfg Non-Mfg+ 4.6%+ 1.1%
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Production Capacity:Manufacturing
Principal Means of Achieving Increases in 2011: Additional plant and/or equipment More hours worked with existing personnel Additional personnel (permanent, temporary or
contract) Fewer shutdowns of operations or facilities
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More hours worked with existing personnel Additional personnel (permanent,
temporary or contract) Additional plant and/or equipment Replaced equipment with technically
advanced equipment
Production Capacity: Non-Manufacturing
Principal Means of Achieving Increases in 2011:
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Production Capacity ChangePredicted For 2012
Predicted Production Capacity
Mfg Non-Mfg+ 5.6% + 3.2%
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Capital Expenditures
Mfg Non-Mfg
+ 11.0% + 4.0%
Mfg Non-Mfg
+ 1.9% + 0.1%
Actual
2011 vs. 2010
Predicted
2012 vs. 2011
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Price Changes Mfg Non-Mfg
Dec 2011 + 5.7% + 2.8%
Reported Purchase Price Changes
End 2011 vs. End 2010
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Mfg Non-Mfg
April 2012 vs. End 2011 + 2.0% + 2.1%
End 2012 vs. End 2011 + 2.9% + 2.7%
December 2011
Predicted Purchase Price Changes
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Predicted Labor and Benefit Costs
Labor & Benefit Costs Mfg Non-Mfg
Dec 2011 + 2.4% + 1.8%
2012 vs. 2011
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Predicted Employment Change
Overall Employment Mfg Non-Mfg
Dec 2011 + 1.3% + 1.1%
End 2012 vs. End 2011
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76
Note: 80.6% of Manufacturing respondents export
65.5
Exports: Predicted Change FirstHalf 2012
ManufacturingManufacturing
63.5
68.5
71.573.0 75.0 75.5 74.4
58.4
80.578
69.9
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17Note: 29.1% of Non-Manufacturing respondents export
Non-ManufacturingNon-Manufacturing
Exports: Predicted Change First Half 2012
68.9
81
69
6567.5
69.5
76
7375
76.3
59.1
50
64
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18Note: 86.6% of Manufacturing respondents import
ManufacturingManufacturing
Imports: Predicted Change First Half 2012
65.564
61.5
73
8077.5 77.5
68.065.7
48.6
66.768.8
62.9
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19Note: 49.6% of Non-Manufacturing respondents import
Non-ManufacturingNon-Manufacturing
Imports: Predicted Change First Half 2012
65.1
60.5 62
55.5
68
73.5
68.5
72.5
80.5
65.5
51.1
58
63.6
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Business Revenues (nominal)
Mfg Non-Mfg
Reported 2011 vs. 2010 + 7.0% + 1.5%
Predicted 2012 vs. 2011 + 5.5% + 3.1%
December 2011
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Industries Predicting Growth in Revenues
2012 vs. 2011 — Manufacturing Computer & Electronic Computer & Electronic
ProductsProducts MachineryMachinery Petroleum & Coal ProductsPetroleum & Coal Products Wood ProductsWood Products Nonmetallic Mineral ProductsNonmetallic Mineral Products Electrical Equipment, Electrical Equipment,
Appliances & ComponentsAppliances & Components Apparel, Leather & Allied Apparel, Leather & Allied
ProductsProducts Furniture & Related ProductsFurniture & Related Products
Transportation EquipmentTransportation Equipment Paper ProductsPaper Products Printing & Related Support Printing & Related Support
ActivitiesActivities Plastics & Rubber ProductsPlastics & Rubber Products Food, Beverage & Tobacco Food, Beverage & Tobacco
ProductsProducts Primary MetalsPrimary Metals Fabricated Metal ProductsFabricated Metal Products Chemical ProductsChemical Products Miscellaneous ManufacturingMiscellaneous Manufacturing
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Industries Predicting Growth in Revenues
2012 vs. 2011 — Non-Manufacturing Professional, Scientific & Professional, Scientific &
Technical ServicesTechnical Services MiningMining ConstructionConstruction Other ServicesOther Services Wholesale TradeWholesale Trade Agriculture, Forestry, Agriculture, Forestry,
Fishing & HuntingFishing & Hunting InformationInformation Retail TradeRetail Trade
Transportation & Transportation & WarehousingWarehousing
Arts, Entertainment & Arts, Entertainment & RecreationRecreation
Accommodation & Food Accommodation & Food ServicesServices
Real Estate, Rental & Real Estate, Rental & LeasingLeasing
Finance & InsuranceFinance & Insurance UtilitiesUtilities Public AdministrationPublic Administration
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Mfg Non-Mfg
Better 41% 35%
Same 43% 50%
Worse 16% 15%
Diffusion Index 62.5% 60%
First Half 2012 vs. Last Half 2011
Business in 2012
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Second Half 2012 vs. First Half 2012
Mfg Non-Mfg
Better 39% 37% Same 53% 53% Worse 8% 10% Diffusion Index 65.5% 63.5%
Business in 2012
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Most Important Issues Facing Business
ManufacturingManufacturing Poor sales (43.9%) Government regulations (22%) Inflation (17.4%) Cost of labor (4.5%) Quality of labor (4.5%) Taxes (4.5%) Interest rates and finance (3%)
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Most Important Issues Facing Business
Non-ManufacturingNon-Manufacturing Poor sales (34.4%) Government regulations (26.4%) Inflation (10.4%) Interest rates and finance (9.6%) Cost of labor (8.8%) Taxes (5.6%) Quality of labor (4.8%)
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Manufacturing Most Cited ApproachesManufacturing Most Cited Approaches
Supplier performance management
Strategic sourcing/supply base rationalization
Demand planning to reduce supply lead times
Inventory management and control
Process and information systems improvements
Supply Chain Improvements 2012
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Non-Manufacturing Most Cited Non-Manufacturing Most Cited ApproachesApproaches
Supply management process improvement
Leverage new and existing technology
Contract management
Professional development
Strategic sourcing
Supply Chain Improvements 2012
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Change for 2012 vs. 2011
Mfg Non-Mfg
Expect to Increase 17% 13%
Expect No Change 54% 68%
Expect to Decrease 29% 19%
Diffusion Index 44% 47%
Predicted Inventory-to-Sales Ratio
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Business Outlook Next 12 Months
Mfg Non-Mfg
Better 46% 44%
Same 38% 38%
Worse 16% 18%
Diffusion Index 65% 63%
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Strength of the U.S. Dollar for 2012
ManufacturingManufacturing
Dec 2012 49.2%
Dec 2011 44.1%
Average Diffusion Index for U.S. Dollar vs. 7 Major CurrenciesAverage Diffusion Index for U.S. Dollar vs. 7 Major Currencies
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Reported Profit MarginsApr 2011 – Nov 2011
Mfg Non-Mfg
Better 31% 27%
Same 32% 37%
Worse 37% 36%
Diffusion Index 47% 45.5%
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Predicted Profit MarginsNov 2011 – Apr 2012
Mfg Non-Mfg
Better 40% 32%
Same 41% 50%
Worse 19% 18%
Diffusion Index 60.5% 57%
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Summary Manufacturing
Operating rate is currently at 79.2%. Production capacity increased by 4.6% in
2011. Production capacity is expected to increase
by 5.6% in 2012. Capital expenditures increased 11% in 2011. Capital expenditures are expected to
increase 1.9% in 2012.
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Prices paid increased 5.7% in 2011. Overall 2012 prices paid are expected to
increase 2.9%. Labor and benefit costs are expected to
increase 2.4% in 2012. Manufacturing employment is expected to
increase 1.3% in 2012. Expect growth in U.S. exports in 2012. Expect growth in U.S. imports in 2012.
Summary Manufacturingcontinued
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Manufacturing revenues (nominal) are up 7% in 2011.
Manufacturing revenues (nominal) are expected to increase 5.5% in 2012.
The U.S. dollar is expected to weaken slightly on average versus major trading partner currencies in 2012.
Overall attitude of manufacturing supply managers: optimistic, with 84% of respondents predicting 2012 will be the same as or better than 2011.
Summary Manufacturingcontinued
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Summary Non-Manufacturing
Operating rate is currently at 85.2%.
Production capacity increased 1.1% in 2011.
Production and provision capacity is expected to increase 3.2% in 2012.
Capital expenditures increased 4% in 2011.
Capital expenditures are expected to increase 0.1% in 2012.
Prices paid increased 2.8% in 2011.
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Prices paid are expected to increase 2.7% in 2012.
Labor and benefit costs are expected to increase 1.8% in 2012.
Non-manufacturing employment is expected to increase 1.1% in 2012.
Expect export levels to increase in 2012.
Expect import growth in 2012.
Summary Non-Manufacturing continued
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Summary Non-Manufacturing continued
Non-manufacturing revenues (nominal) are up 1.5% in 2011.
Non-manufacturing revenues (nominal) are expected to rise 3.1% in 2012.
Overall attitude of non-manufacturing supply managers: mostly positive outlook, with 82 percent of respondents predicting 2012 will be the same as or better than 2011.
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Questions