Economic Growth to Continue Through 2021

Estimated reading time: 2 minutes

The economic recovery in the U.S. will continue for the rest of 2021, say the nation's purchasing and supply executives in the Spring 2021 Semiannual Economic Forecast. Expectations for the remainder for 2021 have strengthened somewhat, compared to December 2020, as there is hope that the corner has been turned on the coronavirus (COVID-19) pandemic; both manufacturing and services sectors are signaling expansion. 

Manufacturing Summary 

Revenue for 2021 is expected to increase, on average, by 7.2 percent. This is 0.3 percentage point higher than the December 2020 forecast of 6.9 percent, and 8.5 percentage points higher than the 1.3-percent decrease reported for 2020 over 2019. Fifty-nine percent of respondents say that revenues for 2021 will increase, on average, 13.8 percent over 2020. Only eight percent say revenues will decrease, on average, 13 percent, and 33 percent indicate no change. With operating rate at 88.3 percent, an expected capital-expenditures increase of 8.7 percent, an expected increase of 8.1 percent in prices paid for raw materials, and an expected employment increase by 2.8 percent by the end of 2021, manufacturing continues its comeback from the turmoil of 2020. "With all 18 manufacturing-sector industries predicting revenue growth in 2021, panelists forecast that recovery will continue the rest of the year. The sectors' responses were consistent with the industry-performance reports in the April 2021 Report On Business®," says Fiore.

All 18 manufacturing industries are expecting increases in revenue in 2021 — listed in order — are: Nonmetallic Mineral Products; Fabricated Metal Products; Miscellaneous Manufacturing; Apparel, Leather & Allied Products; Machinery; Wood Products; Computer & Electronic Products; Chemical Products; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Plastics & Rubber Products; Primary Metals; Transportation Equipment; Furniture & Related Products; Paper Products; Printing & Related Support Activities; Textile Mills; and Petroleum & Coal Products.

Services Summary

Respondents currently expect a 5.4-percent net increase in overall revenues, which is 3.8 percentage points higher than the 1.6-percent increase forecast in December 2020. Forty-eight percent of respondents say that revenues for 2021 will increase, on average, 15 percent over 2020. Meanwhile, 11 percent say their revenues will decrease, on average, 16.6 percent, and 41 percent indicate no change. "Services will continue to recover over the rest of 2021. Services companies are currently operating at 89.4 percent of normal capacity. Supply managers have indicated that prices are projected to increase 4.9 percent over the year, reflecting increasing inflation. Employment is projected to increase 2.4 percent. Sixteen of 18 industries are forecasting increased revenues, compared to the 12 industries that predicted increases in December 2020," says Nieves.

The 16 services industries that expect revenue increases in 2021, listed in order, are: Arts, Entertainment & Recreation; Mining; Wholesale Trade; Professional, Scientific & Technical Services; Management of Companies & Support Services; Information; Transportation & Warehousing; Educational Services; Health Care & Social Assistance; Retail Trade; Other Services; Accommodation & Food Services; Agriculture, Forestry, Fishing & Hunting; Finance & Insurance; Construction; and Public Administration.