The U.S. economy will continue to improve in 2023, say the nation’s purchasing and supply management executives in the December 2022 Semiannual Economic Forecast from the Institute for Supply Management.

Revenues are expected to increase in 15 of 18 manufacturing industries and 14 of 18 services-sector industries. Capital expenditures are expected to increase by 2.6% in the manufacturing sector (after a 12% increase in 2022) and by 2.8%  in the services sector (after a 6-% increase in 2022). The manufacturing employment base is expected to grow by 3.9% and the services employment base is expected to increase by 1% in 2023. Compared to the first half (H1), growth in the second half (H2) of the year is projected to rebound in manufacturing and accelerate in services.

“Manufacturing’s purchasing and supply executives expect to see overall growth in 2023. They are pessimistic about overall business prospects for the first half of 2023, but project growth returning in the second half. According to the ISM Report On Business, manufacturing grew for 29 consecutive months from June 2020 through October 2022 but dipped into contraction in November after declining in five out of the previous six months. Respondents expect raw materials pricing pressure to increase in 2023, but still see first half 2023 profit margins improving over second half 2022. Wages and employment will continue to grow. Manufacturers also predict growth in both exports and imports in 2023,” says Timothy R. Fiore, who chairs ISM's manufacturing survey committee.

Half (50%) of services supply management executives expect their 2023 revenues to be higher than in 2022. They expect a 3.1%  net increase in overall revenues for 2023 compared to a 2.1% increase reported for 2022.

“Services supply executives report operating at 89.9% of normal capacity, slightly less than the 91% reported in May 2022. They are optimistic about continued growth in the first half of 2023 and expect more growth in the second half, with a projected increase in growth rate for capital reinvestment. They forecast that their capacity to produce products and provide services will rise by 3.4% during 2023, and capital expenditures will increase by 2.8%. Services panel members also predict their overall employment will increase by 1% during 2023,” says Anthony S. Nieves, who chairs ISM's services survey committee.

Respondents in services industries expect the prices they pay for materials and services to increase by 8.4% during 2023. They also forecast that their overall labor and benefit costs will increase 3.5%. Profit margin decreases were reported in the second and third quarters of 2022 and respondents expect them to decrease between now and May 2023.

Respondents in services industries expect the prices they pay for materials and services to increase by 8.4% during 2023. They also forecast that their overall labor and benefit costs will increase 3.5%. Profit margin decreases were reported in the second and third quarters of 2022 and respondents expect them to decrease between now and May 2023.