Optimism In US Economy Falls Sharply Among Industrial Manufacturers

Download the free Manufacturing Barometer 3Q 2007 report for complete results.


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 percent, are optimistic about the domestic economy, a 17-point drop from the 62 percent level of optimism reported last quarter.

Higher Energy Costs, Lack of Demand, Regulatory Pressures and Lower Profitability 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 percent of the respondents. However, lack of demand (cited by 53 percent), legislative/regulatory pressures (50 percent) and decreasing profitability (48 percent) all showed significant increases as potential barriers to future growth.

International Prospects Remain Bright
Indeed, international markets remain strong for these U.S.-based industrial manufacturers with over three-quarters (79 percent) expressing optimism about the world economy over the next 12 months. Two-thirds (67 percent) of those who sell abroad increased their international sales in the most recent quarter.

Manufacturers Scaling Back Plans for Major New Investments
The majority of manufacturers are scaling back plans for major new investments over the next 12 months. Only 42 percent are planning new initiatives over the next year, a decrease from 57 percent citing plans for major investments last quarter. However, the average percent of revenue put aside for major new investments remains high at 8.7 percent.

More Spend on Information Technology
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 percent planning to expand their IT capabilities. On the flip side, R&D investments dropped off to 37 percent.

More Than Half Plan To Add Workers
A little more than half (52 percent) 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 percent citing a lack of qualified workers as a potential barrier to future growth.

For complete results, download the free Manufacturing Barometer 3Q 2007 report.

PricewaterhouseCoopers’ "Manufacturing Barometer" is developed and compiled with assistance from the opinion and economic research firm of BSI Global Research, Inc.