Purchasing, supply chain execs foresee U.S. growth in 2010

Although purchasing and supply managers expect positive conditions seen in the U.S. manufacturing sector during the latter part of 2009 to continue in 2010, with revenue increasing 5.7%, they also say capital business investment, a major driver of the economy, will decline by about 5.4%.

The projections, which result from a survey done by the Institute for Supply Management (ISM; Tempe, AZ), are less optimistic for the non-manufacturing sector, whose respondents predict only a 1.3% increase in overall revenue. Manufacturing sector respondents were optimistic about the first half of 2010 and still more so for the second half.

Manufacturing purchasing execs say they are operating at 70.1% of normal capacity, up from 67% in April 2009, and that they will reduce inventories to improve their inventory-to-sales ratios in 2010. They predict strength in both exports and imports in 2010, despite an expectation that the U.S. dollar will weaken against the currencies of its major trading partners.

Manufacturing respondents to the ISM survey said they expect the prices they pay to rise 0.2% during the first four months of 2010, and an additional 2.4% for the rest of the year. They also said they expect to improve their supply chains through supplier consolidation, new or upgraded enterprise technology, improved inventory and asset management, lean manufacturing, and cost reduction. Their main concerns are the weak economy, the credit crisis, taxes, healthcare and benefits costs, and high energy costs. —immeditorial@cancom.com