The Institute for Supply Management (ISM) has released its highly anticipated December 2024 Supply Chain Planning Forecast , offering valuable insights into the future of American industry amid ongoing economic uncertainties. The comprehensive report analyzes current conditions and future projections for both manufacturing and services sectors, based on direct feedback from procurement and supply chain executives nationwide.
Manufacturing Sector: Poised for Growth Despite Challenges
The ISM report indicates that while U.S. manufacturing revenue grew by a modest 0.8% in 2024 - slightly below the 2.1% projection made in May - industry leaders remain optimistic about 2025. The forecast predicts a 4.2% revenue growth next year, with 60% of surveyed executives expressing confidence in continued expansion.
Notably, 10 out of 18 manufacturing subsectors showed positive growth in 2024, demonstrating the industry's resilience. Leading performers included:
• Computer and electronic products
• Miscellaneous manufacturing
• Furniture and related products
• Electrical equipment and components
• Food, beverage, and tobacco products
Capital expenditures in manufacturing exceeded expectations, growing 5.2% in 2024 - significantly higher than the 1% estimate from earlier projections. The same growth rate is anticipated for 2025, with 33% of respondents reporting average capital expenditure increases of 30%.
Key Manufacturing Trends for 2025
The report identifies several critical factors that will shape manufacturing in the coming year:
•
Prices:
3% increase in 2024, with another 3% projected for 2025
•
Employment:
0.8% growth expected in 2024
•
Capacity:
1.7% growth in 2024, projected to reach 4% in 2025
•
Capacity Utilization:
Currently at 82.3% of normal levels
Services Sector: Strong Performance Across All Subsectors
The services industry outperformed expectations with 3.7% revenue growth in 2024, surpassing the 2.9% May projection. Remarkably, all 18 services subsectors reported growth, with 51% of respondents averaging 9.6% revenue increases.
Capital expenditures in services are projected to grow 5.1% in 2025 , with 33% of organizations planning average increases of 21%. Current capacity utilization stands at 87.4%, slightly below the 88.6% reported earlier in 2024.
Critical Services Sector Indicators
Key metrics for services businesses include:
•
Capacity:
3.2% growth in 2024
•
Prices:
5.2% increase in 2024, with 5.3% projected for 2025
•
Employment:
0.8% growth expected in 2025
•
Labor Costs:
3.5% increase anticipated in 2025
Strategic Recommendations for Business Leaders
The ISM report suggests several strategic approaches for businesses navigating the 2025 economic landscape:
•
Manufacturers
should focus on technology investments, productivity improvements, and supply chain resilience to manage cost pressures
•
Service Providers
should prioritize customer experience enhancements, workforce development, and operational efficiency
• All businesses should monitor raw material costs, labor market conditions, and capacity utilization to optimize performance
The comprehensive analysis suggests that despite ongoing challenges including inflationary pressures and geopolitical uncertainties, both manufacturing and services sectors are positioned for continued growth in 2025, contributing to broader U.S. economic expansion.