U.S. Manufacturing to Grow in 2011

U.S. Factory Revenue to Grow in 2011: ISM

Factory Worker

NEW YORK (Reuters) – The manufacturing and services sectors will grow in 2011, with manufacturing revenue expected to increase by 5.6 percent, the Institute for Supply Management said in a semi-annual forecast released on Tuesday.

Revenue in the non-manufacturing sector, which comprises mostly service sector businesses, is expected to increase by 3.4 percent next year, ISM said in a statement, up sharply from a 0.2 percent revenue increase in 2010.

Manufacturing revenue rose 7.9 percent in 2010, ISM said.

“While 2010 has been a year of recovery in manufacturing, our forecast sees improvements in both investment and employment in 2011,” said Norbert J. Ore, chairman of the ISM Manufacturing Business Survey Committee.

Capital investment in the factory sector should jump by 14.5 percent next year, up from a 5.9 percent increase reported for 2010.

Along with increased investment, though, purchasing and supply executives at manufacturing firms expect to pay higher prices for materials in 2011, with an overall increase of 4 percent seen on the year, ISM reported.

Most firms also expect the dollar to weaken in 2011 against the major currencies save the Mexican peso, the survey found. A weaker dollar usually helps the sector by making U.S. products cheaper overseas.

Employment in the sector, which grew 7.1 percent in 2010, is expected to increase by 1.8 percent next year.

Non-manufacturing firms are more optimistic that growth will pick up in the first half of 2011, “and they have a higher level of optimism about the next 12 months than they had last December for 2010,” said Anthony S. Nieves, chairman of the ISM Non-Manufacturing Business Survey Committee.

After struggling for much of 2010, the U.S. economy has shown some signs of firmer growth in recent months, though the recovery remains fragile, with the jobless rate jumping to 9.8 percent in November.

Non-manufacturing sector capital investment is expected to rise by 3.7 percent. Employment is seen growing at a more modest 0.3 percent, though, after falling by 2.1 percent in 2010, the survey showed.

(Reporting by Steven C. Johnson; Editing by Andrew Hay)

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