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ISM: Modest economic growth to continue in 2016

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ISM:  Modest economic growth to continue in 2016

Both manufacturing and services sectors expect increased sales in 2016.

According to a semi-annual survey by the Institute for Supply Management, economic growth in the United States will continue in 2016, albeit modestly.

Expectations are for a continuation of the economic recovery that began in mid-2009. The manufacturing sector is optimistic about growth in 2016, with revenues expected to increase in 16 manufacturing industries, and the non-manufacturing sector predicts that 15 of its industries will see higher revenues. Capital expenditures, a major driver in the US economy, are expected to increase by 1% in the manufacturing sector and by 7.5% in the non-manufacturing sector. Manufacturing expects that its employment base will grow by 0.2%, while non-manufacturing expects employment growth of 1.7%.

Manufacturers are also predicting growth in both exports and imports in 2016."

Manufacturing Sector

Expectations for 2016 are positive as 63% of survey respondents expect revenues to be greater in 2016 than in 2015. The panel of purchasing and supply executives expects a 4.1% net increase in overall revenues for 2016, compared to a 1.4% increase reported for 2015 over 2014 revenues.

"Manufacturing purchasing and supply executives expect to see growth in 2016. They are optimistic about their overall business prospects for the first half of 2016, and are more optimistic about the second half of 2016," said Holcomb. "In 2015, manufacturing experienced 10 consecutive months of growth from January through October, followed by one month of contraction in November, resulting in an average PMI of 51.7 for the first 11 months of 2015. Our forecast calls for more growth in 2016. Respondents expect raw materials pricing pressures in 2016 to be very low, and expect their profit margins will improve in 2016 over 2015. Manufacturers are also predicting growth in both exports and imports in 2016."

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