The Institute for Supply Management [ISM] sharply downgraded on Tuesday its 2009 projections for economic activity and investment in both the manufacturing and non-manufacturing sectors compared with sentiments expressed in December 2008 when the ISM did its last semiannual economic forecast.
ISM said it now expects capital spending to plunge 22.7%, more than three times worse than its forecast in December for a 6.7% decline.
From ISM: “Given the significant decline in activity, 2009 shapes up as a very difficult year for U.S. manufacturers,” said Norbert J. Ore, CPSM, C.P.M., chair of the ISM Manufacturing Business Survey Committee.
The group also said in its semi-annual report that non-manufacturing companies will see a 13.5% drop-off in new spending, far weaker than the 8.4% fall predicted in the last survey. The ISM survey also indicated that, on net, revenues are expected to drop 5.1% in 2009, a switch from the 0.7% increase expected in December.
In the manufacturing sector the report indicated a net nominal decrease of 14.7% in business revenues for 2009 over 2008. This is a significantly greater decrease than the 1.1% decrease that was forecast in December 2008 for all of 2009.
While monthly ISM reports on both factories and services have shown some signs of moderation in the pace of contraction, today’s report suggest that the economic decline will continue in the U.S. throughout the remainder of 2009.