MNI BRIEF: ISM Report Sees Positive 2023 Outlook

The manufacturing and services sector should see steady improvement in activity over the course of 2023, according to key indicators in the December 2022 ISM Semiannual Economic Forecast released Friday.

The forecast indicates the manufacturing contraction that started in November may persist in the first half of 2023 but return to growth in the second half, while the services sector forecast indicates continued expansion in 2023. Data for the report is based on feedback from U.S.-based purchasing and supply chain executives in manufacturing and non-manufacturing sectors.

(See: MNI INTERVIEW: Services Growth Muddies Fed Inflation Fight-ISM)

Manufacturing prices, which increased 11.4% in 2022, are expected to increase 2% next year, as labor and benefit costs are seen increasing 5.8% and employment 3.9%. On the services side, prices paid increased 11% this year and are expected to rise 8.4% next year, as labor and benefit costs are projected to climb 3.5% and employment 1%. Profit margin decreases were reported in the second and third quarters of 2022 in the services sector and respondents expect them to decline between now and May 2023.