U.S. Factory Sales, Spending to Outpace Services, ISM Says

Manufacturers in the U.S. are more optimistic about sales and spending next year than service providers, signaling that factories will support the economic expansion after they slumped in recent months, according to a survey by the Institute for Supply Management.

Purchasing managers at U.S. factories anticipate sales will grow 4.6 percent in 2013 and business investment will increase 7.6 percent, the Tempe, Arizona-based group’s forecast showed today. By contrast, service providers estimate revenue will grow 4.3 percent next year and that capital spending will rise 7 percent, the ISM said.

“Manufacturing, purchasing and supply executives expect to see continued growth in 2013,” Bradley Holcomb, chairman of the group’s factory committee, said in a statement. “They are optimistic about their overall business prospects for the first half of 2013 and are even more optimistic about the second half.”.

Service providers saw greater promise for a rise in staff, predicting a 1.3 percent increase by the end of 2013, while manufacturers projected employment will grow 0.8 percent next year.

Factory leaders expect input prices to rise 2.8 percent by the end of 2013 and service providers see a 2.7 increase in input costs, the ISM survey said.

ISM Manufacturing

Earlier this month, the ISM reported that manufacturing unexpectedly shrank in November, as managers grew more concerned about the potential economic toll stemming from the so-called fiscal cliff and slower growth abroad. The ISM’s factory index dropped to 49.5 last month from 51.7 in October, figures indicated Dec. 3.

Two days after the factory gauge was released, the ISM services gauges showed those industries unexpectedly grew at a faster pace in November. The ISM reported that its index of non- manufacturing companies increased to 54.7 last month from 54.2 in October.

For both indexes, readings greater than 50 signal growth.

To contact the reporter on this story: Alex Kowalski in Washington at akowalski13@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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