Alice Gens Chief Operating Officer/CFO | New Jersey Business & Industry Association
+ Commerce
New Jersey Review | May 19, 2025

Tariffs and geopolitical factors lead to flat manufacturing forecast for 2025

The latest report from the Institute of Supply Management (ISM) indicates that manufacturing revenues are expected to remain flat for 2025. This is a significant decrease from the December forecast, which predicted a 4.2% increase. The report attributes this change to trade issues, ongoing inflation concerns, and geopolitical uncertainty.

According to the Spring 2025 ISM Supply Chain Planning Forecast, respondents have become less optimistic compared to six months ago. They now anticipate only a 0.1% increase in manufacturing revenue, a 1.3% decrease in capital expenditures, and capacity utilization at 79.2%. The price of raw materials is projected to rise by 7.5%, while manufacturing employment is expected to see a slight decline of 0.1%.

Out of the 18 manufacturing sectors analyzed, only eight are expected to experience revenue growth: Primary Metals; Miscellaneous Manufacturing; Computer & Electronic Products; Chemical Products; Electrical Equipment, Appliances & Components; Printing & Related Support Activities; Food, Beverage & Tobacco Products; and Transportation Equipment.

In the services industry, there is also a shift in expectations with no overall change anticipated for 2025 revenues compared to the previous forecast of a 3.9% increase made in December 2024. Capital expenditures in this sector are predicted to decrease by 3.3%, with operating capacity levels forecasted at an overall rate of 86.5%.

Nine out of eighteen service industry sectors are projected to see revenue increases: Accommodation & Food Services; Arts, Entertainment & Recreation; Finance & Insurance; Information; Wholesale Trade; Transportation & Warehousing; Health Care & Social Assistance; Professional, Scientific & Technical Services; and Utilities.

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