US factories, services companies more optimistic about 2013

NEW YORK Tue Dec 11, 2012 12:16pm EST

NEW YORK (Reuters) - The U.S. economy is expected to experience steady growth next year with revenue and investment in the manufacturing and services sectors seen rising, according to an industry report on Tuesday, after signs of weakness in both sectors during the second half of this year.

The more optimistic outlook comes after the manufacturing sector contracted for four of the six months from June to November while the service sector, although maintaining growth throughout the year, has had a bumpy ride.

"Our forecast for 2013 calls for a resumption of growth," said Bradley Holcomb, chair of the manufacturing business survey committee at the Institute for Supply Management, which issued Tuesday's report. "(Respondents) are optimistic about their overall business prospects for the first half of 2013, and are even more optimistic about the second half of 2013."

Manufacturing revenue is expected to increase 4.6 percent in 2013 from the year before and 4.3 percent in the services sector, the ISM's semi-annual forecast said.

Manufacturing revenue increased 4 percent in 2012 over 2011 revenues, while services revenues rose 3.4 percent, ISM said.

In addition, the survey also showed that capital investment, a major driver of investment in the U.S. economy, is seen rising 7.6 percent among manufacturing firms, and climbing 7.0 percent in the service sector.

The greater confidence is seen especially in the investment numbers. Capital investment in the manufacturing sector rose 3.7 percent in 2012 compared to 2011, according to ISM.

Employment, however, continues to be subdued in both sectors, pointing to the slow nature of the recovery in the labor market. Manufacturers expect employment in the sector to increase by just 0.8 percent in 2013. In the service sector employment growth is seen at 1.3 percent.

The ISM's monthly surveys on the manufacturing and services sectors are closely followed by economists and investors as an early look at the health of the economy.

(Reporting By Edward Krudy; Editing by Chizu Nomiyama)

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