Semiannual forecast shows 2025 growth expectations down since year’s start

TEMPE, Ariz. — The U.S. economy will be mostly flat for the rest of 2025, say the nation’s purchasing and supply executives in the Spring 2025 ISM Supply Chain Planning Forecast.

Expectations for the rest of this year are lower than in the last forecast, previously known as ISM Semiannual Economic Forecast, released in December 2024.

Manufacturing sector

For the manufacturing sector, revenue for 2025 is expected to increase, on average, by 0.1%, 4.1 percentage points lower than the previous forecast of 4.2% and 0.7 percentage points lower than the 0.8-percentage-point year-over-year increase reported for 2024.

Thirty-four percent of respondents say that revenues for 2025 will increase an average of 9.7% compared with last year; 22% say revenues will decrease 14.1% average, and 44% indicate no change.

With an operating rate of 79.2%, a projected decrease in capital expenditures, an increase in raw materials prices, and a decrease in employment expected by the end of 2025, the manufacturing sector is forecast to grow very slightly.

“With eight manufacturing industries expecting revenue growth in 2025 and eight industries expecting employment growth in 2025, panelists forecast a flat rest of the year,” said Timothy R. Fiore, chair of the ISM Manufacturing Business Survey Committee.

Eight of 18 industries are projected to see revenue increases for the rest of 2025: Primary Metals; Miscellaneous Manufacturing; Computer & Electronic Products; Chemical Products; Electrical Equipment, Appliances & Components; Printing & Related Support Activities; Food, Beverage & Tobacco Products; and Transportation Equipment.

The Furniture & Related Products sector is not expected to see growth this year, according to the forecast.

Manufacturing production capacity is expected to increase 1.8% in 2025, a drop from the 4% projected at the beginning of the year. The Furniture sector is one of five industries expecting production to remain flat or decrease this year.

Survey respondents expect a 1.3% decrease in capital expenditures in 2025, much lower than the 5.2% increase forecast in December 2024. Only seven of the 18 industry segments, not including furniture, expect to increase capital expenditures.

What about tariffs?

The spring survey included questions related to the impact of tariffs, including: How do you plan to change your selling prices for products or services in response to tariffs?

More than half of the manufacturing industries (52%) indicated they would pass on some of the cost increases in sales prices and absorb some through reduced margins. Another 35% said they would pass on all of the cost increases into sales prices.

Only 7% said their costs would not be impacted by tariffs, and only 3% said they would absorb all the cost increases.

In addition to the forecast, the Manufacturing ISM Report On Business is issued monthly. The report, compiled from responses to questions asked of purchasing and supply executives across the country, tracks industrial production, new orders, inventories, supplier deliveries, employment, buying policies and prices. Survey panelists are divided into the following NAICS code categories: Food, Beverage & Tobacco Products; Textile Mills; Apparel, Leather & Allied Products; Wood Products; Paper Products; Printing & Related Support Activities; Petroleum & Coal Products; Chemical Products; Plastics & Rubber Products; Nonmetallic Mineral Products; Primary Metals; Fabricated Metal Products; Machinery; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Furniture & Related Products; and Miscellaneous Manufacturing (including products such as Medical Equipment & Supplies, Jewelry, Sporting Goods, Toys & Office Supplies).