Factories in U.S. Boost Sales Projections for 2013, ISM Says

Manufacturers in the U.S. are more optimistic about sales and spending this year than they were at the end of 2012, while service providers were less upbeat, according to a semiannual survey by the Institute for Supply Management.

Purchasing managers at factories anticipate sales will grow 4.8 percent in 2013, up from the 4.6 percent they forecast in December, and business investment will rise 9.1 percent, more than the prior projection of 7.6 percent, the Tempe, Arizona-based group’s survey showed today. By contrast, service providers estimate revenue growth of 3.5 percent this year, less than their December forecast of 4.3 percent, the ISM said.

“With 17 out of 18 industries within the manufacturing sector predicting growth in 2013 over 2012, U.S. manufacturing continues to demonstrate its broad-based strength, efficiency and leadership in the world economy,” Bradley Holcomb, chairman of the group’s factory committee, said in a statement.

According to ISM’s survey, purchasing managers at service providers projected a 3.6 percent increase in 2013 capital spending, down from a 7 percent gain.

The outlook for employment was little changed compared with the December survey. Service providers still forecast a 1.3 percent increase in staff by the end of 2013, today’s report showed. Manufacturers projected a 0.9 percent rise in employment, compared with a prior forecast of 0.8 percent.

First Quarter

The economy grew at a 2.5 percent annualized rate in the first quarter, less than the median forecast of economists surveyed by Bloomberg and limited by a drop in defense outlays, figures showed last week. Consumer spending gained 3.2 percent, the most since the fourth quarter of 2010 and boosted by outlays on utilities because of colder-than-normal weather.

Recent reports indicate the economy is getting less of a boost from business investment as $85 billion in automatic budget cuts that began March 1 take effect. Corporate spending on equipment and software grew at a 3 percent pace from January through March, after an 11.8 percent rate the prior quarter, according to the GDP report.

The ISM group may report tomorrow that its manufacturing index was little changed at 50.7 in April after 51.3 a month earlier, according to the Bloomberg survey median. The group’s services gauges, due on May 3, may come in at 54 after 54.4, economists predicted. Index readings greater than 50 signal growth.

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