FREE SUBSCRIPTION Includes: The Advisor Daily eBlast + Exclusive Content + Professional Network Membership: JOIN NOW LOGIN
Skip Navigation LinksHome / News / Read News

Print

PwC: U.S. Industrial Manufacturers Remain Positive on Revenue Growth Expectations

October 26, 2012, 07:16 AM
Filed Under: Economic Commentary

Despite continued uncertainty about the prospects of both the U.S. and global economies, the majority of U.S. industrial manufacturers remain positive regarding the overall revenue outlook for the next 12 months, according to the Q3 2012 Manufacturing Barometer released today by PwC US.

Eighty-two percent of respondents forecast revenue growth at their own companies for the next 12 months, and only nine percent expect negative results, with many of the respondents planning to hire additional employees, as well as invest in new products and research and development.  However, the projected average growth rate for own-company revenue over the next 12 months dropped to 4.6 percent from 5.6 percent in the second quarter, and below last year's five percent estimate.

"While the majority of U.S. industrial manufacturers continue to forecast revenue growth at their companies over the next 12 months, overall sentiment among those surveyed remains cautious toward the direction of both the U.S. and global economies," said Bobby Bono, U.S. industrial manufacturing leader for PwC.  "Margins remained flat during the third quarter and inventories rose, while concerns rose regarding a lack of demand as a barrier to growth.  There was also a notable pullback in capital and operational spending plans for overseas expansion.  These factors may point to the continued uncertain global climate and a more guarded approach being taken by industrial manufacturers."

Optimism regarding the 12-month outlook for the U.S. economy dropped to 37 percent in the third quarter of 2012, down 15 points from 52 percent in the second quarter, but remained well above the record low levels during the same quarter of 2011.  Meanwhile, sentiment regarding the 12-month outlook for the world economy among manufacturers who market abroad remained low at 29 percent, although this level improved by 16 points from 13 percent in the second quarter.  Still, the majority of respondents (54 percent) expressed uncertainty regarding the 12-month outlook for both the U.S. and global economies.

In addition to the uncertainty U.S. industrial manufacturers are facing, they also identified the top three barriers to growth during the next 12 months.  Lack of demand rose sharply to 67 percent in the third quarter of 2012, from 48 percent in the previous quarter, followed by legislative/regulatory pressure at 44 percent and oil/energy prices at 33 percent," said Bono.

Despite the cautious outlook, more U.S. industrial manufacturing panelists are planning net new hiring over the next 12 months, at 47 percent, up five points from the previous quarter.  Only seven percent plan to reduce the number of full-time equivalent employees.  The most sought-after employees are expected to be professionals/technicians (33 percent), production workers (25 percent) and skilled labor (21 percent).

With regard to spending, 49 percent of respondents plan major capital investments over the next 12 months, slightly below last quarter and a year ago (55 percent).  However, their mean investment as a percentage of total sales at 5.8 percent was higher than the second quarter and similar to the third quarter of 2011.  The survey also projects a rise in operational spending, with 83 percent planning increased spending in the next 12 months, focused on new products or service introductions (46 percent) and research & development (46 percent).

PwC's Manufacturing Barometer is a quarterly survey based on interviews with 57 senior executives of large, multinational U.S. industrial manufacturing companies about their current business performance, the state of the economy and their expectations for growth over the next 12 months. This survey summarizes the results for Q3 2012 and was conducted from July 26, 2012 to October 8, 2012.

View the complete Manufacturing Barometer report.







Comments From Our Members

You must be an Equipment Finance Advisor member to post comments. Login or Join Now.