Home » Report: Industrial Manufacturing Optimism Index Falls
Report: Industrial Manufacturing Optimism Index Falls
October 26, 2007
The following findings from PricewaterhouseCoopers'Manufacturing Barometer, a quarterly survey, are based on interviews conducted between August 1, 2007, and October 12, 2007, with 60 senior executives of large, multinational U.S. industrial manufacturing companies.
Optimism Falls Sharply Among Industrial Manufacturing Executives Optimism in the U.S. economy dropped significantly among industrial manufacturers during the third quarter of this year according to PricewaterhouseCoopers'Manufacturing Barometer. Less than half of those surveyed, 45%, are optimistic about the domestic economy, a 17-point drop from the 62% level of optimism reported last quarter.
Higher Energy Costs, Lack of Demand Lead Concerns Consistent with previous quarters, high oil and energy prices are the most likely barrier to growth over the next 12 months, cited by 57% of the respondents. However, lack of demand (cited by 53%), legislative/regulatory pressures (50%) and decreasing profitability (48%) all showed significant increases as potential barriers to future growth.
International Markets Remain Strong International markets remain strong for U.S.-based industrial manufacturers with over three-quarters (79%) expressing optimism about the world economy over the next 12 months. Two-thirds (67%) of those who sell abroad increased their international sales in the most recent quarter.
Manufacturers Scaling Back Investment Plans The majority of manufacturers are scaling back plans for major new investments over the next 12 months. Only 42% are planning new initiatives over the next year, a decrease from 57% citing plans for major investments last quarter. However, the average% of revenue put aside for major new investments remains high at 8.7%.
More Spend on IT For those who are investing, they are looking to spend more on information technology (IT) -a trend that continues into the third quarter, with 57% planning to expand their IT capabilities. On the flip side, R & D investments dropped off to 37%.
More Than Half Plan To Add Workers A little more than half (52%) plan to add new workers over the next 12 months, consistent with hiring plans from the previous quarter. They are concerned about the availability of key workers, however, with 37% citing a lack of qualified workers as a potential barrier to future growth.