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PwC Manufacturing Report: Optimism at All-Time Low for U.S. & World Economies

10/27/2011
Only five percent of U.S. industrial manufacturers are optimistic about the prospects of the U.S. economy improving over the next 12 months, according to findings of the new third quarter 2011 "Manufacturing Barometer" released by consulting firm PwC US.

The Barometer is a quarterly survey based on interviews with 60 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. It summarizes the results for Q3 2011, and was conducted from August 1 through October 12, 2011.

"There has been a significant shift away from optimism for the U.S. economy among U.S. industrial manufacturers over the past three months," said Barry Misthal, global industrial manufacturing leader for PwC. "Yet they aren't pessimistic, which aligns with how they positively view their own revenue prospects and are positioning and driving their businesses for growth in the next 12 months. The findings of the Q3 Barometer suggest.strategic investments and plans being made by U.S. industrial manufacturers are strengthening their company's potential in the face of an uncertain economic environment."

Highlights from the Manufacturing Barometer include:
• The vast majority of respondents (77 percent) were "uncertain" about the U.S. economy recovering rather than pessimistic (21 percent).
• Prospects for the world economy over the next 12 months echoed similar trends for the U.S. economic outlook, with only seven percent of U.S.-based industrial manufacturers who market abroad being optimistic about the prospects for the world economy over the next 12 months
• The projected average growth rate for own-company revenue over the next 12 months fell to five percent (from 6.5 percent in the second quarter). But 75 percent of panelists expect their companies to grow over the next 12 months. Of those expecting growth, 22 percent forecast double-digit growth and 53 percent single-digit growth, while 20 percent forecast zero growth and only five percent expect negative growth.
• Lack of demand climbed 17 points over the prior quarter as 57 percent of panelists cited this as the leading potential barrier to growth. A majority of them also cited oil/energy prices and legislative/regulatory pressures. Taxation concerns dropped 13 points to 40 percent, and pressure for increased wages was off 10 points to a lower 22 percent.

Over 90 percent of respondents noted international sales were either up or the same compared to three months ago and projections continue to rise, said Misthal. This demonstrates they are "finding good opportunities to expand their businesses overseas to confront concerns over a retrenching U.S. economy," he added.

Download a free copy of the full report by visiting pwc.to/vKGcqC.

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