US manufacturers expect a bounce in revenues in 2020 despite lingering unease over trade tariffs that are prompting supply chain shifts, according to an industry survey released Monday.
The semi-annual survey painted a mixed picture for US manufacturers overall, with companies forecasting flat employment and lower capital spending but higher overall sales.
That could spell at least some relief for a sector hit hard by President Donald Trump’s trade war with China, and that country’s slowing economy.
The projected 4.8 percent bump in manufacturing revenues was “one of the more surprising” figures in the semi-annual survey, said Timothy Fiore of the Institute for Supply Management, which released the report.
Fiore noted that manufacturers had overestimated sales in the last survey in May, projecting that 2019 revenues would rise 4.0 percent. At this point the increase is expected to come in at 1.9 percent, the report said.
The upbeat revenue forecast could reflect manufacturers’ belief that they are now “at the maximum impact” as far as items that could be affected by trade conflicts after Trump administration tariffs on steel and aluminum and a series of measures on Chinese goods.
But Fiore also noted that Trump last week reinstated tariffs on metals from Brazil and Argentina and announced new tariffs on French goods.
“Trade continues to weigh on the supply community,” Fiore said.
Manufacturing has emerged as a vulnerable part of the US economy amid myriad trade tariffs and threats from Trump, with up-and-down talks with China especially worrisome to the business community.
Weak US manufacturing figures have also reflected company-specific issues such as the Boeing 737 MAX crisis that has forced the aviation giant to cut production on the plane and the General Motors strike, which ended in late October.
The survey showed more than half of the respondents in manufacturing have either changed their production footprint or are evaluating new sources of supply because of US tariffs.
The figures were slightly lower among non-manufacturing companies surveyed, with 43.9 percent evaluating new sources of supply and 1.3 percent having already shifted supply.
The report overall suggested the services sector would continue to outperform manufacturing, with companies projecting modest increases in both capital spending and employment.