ISM’s ‘special questions’ focus on strong dollar and low oil prices
One of the many interesting facets of the Semiannual Economic Forecast issued by the Institute for Supply Management (ISM) is its “special questions” segment featured at the end of the report.
Latest News
Cargo Shipping Remains on Hold in Baltimore Following Bridge Collapse Maximizing the Bottom Line: The Power of Procurement Baltimore Bridge Collapse Latest Supply Chain Disruption 6 Questions With … Tom Plotkin February and year-to-date U.S. import volume is solid, reports S&P Global Market Intelligence More NewsLatest Resource
2024 Supply Chain Management Readiness Index Lack of predictive view leaving organizations vulnerable to disruptionAll Resources
One of the many interesting facets of the Semiannual Economic Forecast issued by the Institute for Supply Management (ISM) is its “special questions” segment featured at the end of the report.
These questions, which were presented to the ISM’s manufacturing and non-manufacturing member respondents, are always topical and relevant to things impacting the industry, and this year was no exception.
The questions for the most recent Semiannual Economic Forecast, which was released last week, included: 1-has the strength of the U.S. dollar had a negative, negligible or positive impact on their organization’s profits?; 2-has the net impact of the depressed prices of oil and related commodities been negative, negligible, or positive for their organization’s profits; and 3-how would they characterize the combined impact of their organization’s profits on the strength of the U.S. dollar and the depressed prices of oil and related commodities.
The first question regarding the strength of the U.S. dollar was divided somewhat evenly among manufacturing respondents, with 32.3 percent saying it had a negative impact on profits, 35.9 percent citing a negligible impact on profits, and 15.7 indicating they were unsure.
The same question posed to non-manufacturing respondents was a bit more staggered, with 12.6 percent citing a negative impact on profits, 44.5 pointing to a negligible impact on profits, and 29.3 being unsure.
Brad Holcomb, chair of the ISM Manufacturing Survey Business Committee, said that many companies actively involved with exporting lament strong dollar, while others with more of an import focus are bullish about it.
“In terms of what this means for manufacturing what might be surprising to some is that less than one-third of our manufacturing respondents cited a negligible impact, with feedback not negative on a whole,” he said.
And Tony Nieves, chair of the ISM Non-Manufacturing Survey Business Committee, said that the impact of the strong U.S. dollar is not as prevalent on the non-manufacturing services side.
“There are not a lot of tangible goods and finished goods exported out of this services sector, as it is more information services, professional scientific and technical services and knowledge management,” he explained. There is more latitude when it comes to pricing that out, and it does not have to be as tied to the value of the dollar compared to overseas currencies making it less impactful there.”
For the second question related to the impact on profits due to the depressed prices of oil and related commodities, roughly one-fifth, or 21.4 percent of manufacturing respondents, said it was having a negative impact on profits, with another 20.5 percent saying it was having a negative impact, 46.4 percent citing positive impact on profits, and 11.6 percent being unsure.
ISM manufacturing chair Holcomb said that with the exception of oil and mining sector respondents, manufacturing is feeling the benefits of largely reduced raw materials prices, which helps to reduce the costs related to running factories.
On the non-manufacturing side, 13.1 percent said low oil and related commodities prices had a negative profit impact, with another 29.8 percent saying it had a negligible impact, 46.1 percent pointing to a positive impact on profits, and 29.3 percent being unsure.
Nieves said low oil prices were far more positive than negative and was transposed into more capital investments as well as over all costs savings, too.
The third and final question relating to the combined impact of a strong dollar and low oil and related commodities expenses were somewhat mixed by sector.
For manufacturing, 27.6 percent cited a negative impact, and 22.2 percent indicated it had a negligible impact, with 33.8 percent saying the combination was positive and 16.4 percent being unsure.
And for non-manufacturing, 13.7 percent pointed to a negative impact, 37.9 percent saying it had a negligible impact, 30 percent said it had a positive impact, with 18.4 percent unsure.
About the Author
Jeff Berman, Group News Editor Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff BermanSubscribe to Supply Chain Management Review Magazine!
Subscribe today. Don't Miss Out!Get in-depth coverage from industry experts with proven techniques for cutting supply chain costs and case studies in supply chain best practices.
Start Your Subscription Today!
Article Topics
Institute for Supply Management · ISM · Management · Manufacturing ·It’s high time to go beyond visibility Driving supply chain flexibility in an uncertain and volatile world View More From this Issue