Slight Growth Expected for U.S. Factories

Manufacturing executives said Tuesday that they expected modest industrial growth by the end of the year but high inventories would take time to clear and more jobs could disappear as companies scramble to cut costs.

The Institute for Supply Management’s semiannual report on business found that manufacturers expect 2003 revenues to increase at a modest 1.9% clip. But the survey predicted that a factory sector already reeling from massive layoffs would see a further 0.5% drop in employment this year.

“Manufacturing, purchasing and supply executives are more optimistic with regard to the economy and see improvement in their organizations’ prospects for the balance of 2003,” said Norbert Ore, head of ISM’s manufacturing business survey committee.

However, he warned that the inability of U.S. factories to get rid of their excess inventories has threatened to delay a long-sought pickup in investment.

“Capacity utilization below 80% discourages capital investment and is reflected in revised spending plans that now predict a decline in year-over-year capital spending,” Ore said.