Report: Optimism plummets among industrial manufacturers
Industrial Distribution staff -- Industrial Distribution, 5/1/2008 6:19:00 AM
Only 12 percent of senior executives indicated optimism about the U.S. economy's prospects over the next year, down from 29 percent during the fourth quarter of 2007 and 57 percent during the same period last year, according to PricewaterhouseCoopers’ Manufacturing Barometer report.Seventy-five percent of industrial manufacturers surveyed for the report said they believe the domestic economy is declining, while only 5 percent believed it was growing.
During last year’s first quarter, 69 percent indicated the economy was growing; this year, 52 percent of respondents said they are pessimistic about the U.S. economy over the next 12 months, compared to only 5 percent a year ago.
“We knew industrial manufacturers were feeling the pressures of the economic downturn; however, the reality of the situation really hit us when we saw this quarter’s findings,” PricewaterhouseCoopers partner and industrial manufacturing sector leader Barry Misthal said. “We expect confidence will remain low for much of 2008, but we are hopeful that the sector will begin to look up as 2009 approaches.”
The quarterly survey, based on interviews with 60 senior executives of multinational U.S. industrial manufacturing companies, indicated that oil and energy prices are potential barriers to growth over the next year; about two-thirds of the executives cited that issue as a major concern.
Other worries cited by respondents include lack of demand (62 percent), the currency exchange rates (57 percent) and decreasing profitability (48 percent).
The one positive note cited by those surveyed was the potential of international markets, as 63 percent of those selling overseas said revenues increased. More than a quarter of the executives planned to expand in international markets abroad over the next year, with 25 percent saying they expect to build new facilities abroad.
But only 38 percent are optimistic about the world economy, down 26 points from the previous quarter and 45 points from last year’s first quarter.
“It appears [that] mounting uncertainty about the U.S. economy is starting to affect opinions about the world economy,” Misthal said. “However, to weather this economic storm, industrial manufacturers must set their sights on growth opportunities abroad, while at the same time maintain the health of their domestic operations by controlling costs and making selective investments of capital.”
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