Supply Excellence — Good and Bad New From ISM…

Good and Bad New From ISM…

May 11th, 2006 · by Tim Minahan · No Comments · supply management

ISM’s Business Survey revealed some good and bad news.

First the good news: supply managers are bullish on prospects for continued growth and performance improvements for the remainder of 2006. According to the forecast released by Norbert J. Ore, group director of strategic sourcing and procurement for Georgia-Pacific Corp. and director of the ISM’s Business Survey Committee, at the ISM Conference,supply managers from both manufacturing and non-manufacturing companies reported faster than expected growth in April and expect their companies’ revenues and capital investments to increase during the second half of 2006.

However, such projections were overhadowed by cotinued reports of inflation and below-normal capacity utilization (see table below). Supply managers reported greater than 4% price increases through the end of April and expect to continue their upward climb.

The chief culprit: oil prices, which at $73 U.S. per barrel have hit an all-time high. Making matters worse: refinery capacity constraints and outages.

Said Ore: “While many members indicate that busines is good, they still have major concerns about the impact of higher prices for energy and industrial commodities.”

ISM projections echo price increases and longer leadtimes that have been reported across most of Purchasing Magazine’s commodities indexes for the past several months.

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