Economic Growth Continues; Manufacturing Growth Expected in 2016

Estimated reading time: 5 minutes

The panel predicts the prices paid for raw materials will increase by 0.1 percent during the first four months of 2016, and will increase an additional 0.4 percent during the balance of the year, with an overall increase of 0.5 percent for 2016. This compares to a reported 2.6 percent decrease in raw materials prices for 2015 compared with 2014.

Two special questions were asked of our panel. The first special question asked about the net impact to date on their organization's profits due to the sharply lower prices of oil and related commodities in 2015. The responses from our manufacturing panel, with percentages of the total number of responses noted, were "Negative" (13.7%), "Negligible" (36%), "Positive" (43.4%), and "Unsure" (6.9%). This indicates that, even though some of our respondents were unsure of the impact of lower oil prices, nearly 80 percent felt lowered oil prices did not have a negative impact on their business.

The second special question asked about the net impact on their organization's profits for the full year of 2015 related to the strength of the U.S. dollar. The responses from our manufacturing panel, with percentages of the total number of responses noted, were "Negative" (21.3%), "Negligible" (37.9%), "Positive" (25.3%), and "Unsure" (15.5%). This indicates that, even though some of our respondents were unsure of the impact of a strong dollar, greater than 60 percent felt the strong dollar did not have a negative impact on their business. In this case, however, the impact was more likely inconsequential rather than positive.

Non-Manufacturing Summary

Sixty percent of non-manufacturing supply management executives expect their 2016 revenues to be greater than in 2015. They currently expect a 3.2 percent net increase in overall revenues for 2016 compared to a 2.7 percent increase reported for 2015 over 2014 revenues. The 15 non-manufacturing industries expecting revenue improvement in 2016 over 2015 — listed in order — are: Construction; Mining; Professional, Scientific & Technical Services; Accommodation & Food Services; Transportation & Warehousing; Information; Retail Trade; Utilities; Management of Companies & Support Services; Arts, Entertainment & Recreation; Wholesale Trade; Public Administration; Other Services; Finance & Insurance; and Educational Services.

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