PwC’s Manufacturing Barometer finds Executives Optimistic About US Economy
Looking ahead, 70 percent of leading manufacturing executives expressed optimism about the 12-month outlook for the US economy, up 40 points from the prior quarter's 30 percent. Only 3 percent were pessimistic off 10 points, while 27 percent were uncertain.
In the first quarter of this year "overall, attitudes toward the US economy's prospects have greatly improved among industrial manufacturing executives." The survey gave reason for optimism, concluding "uncertainty in the US economy continues to dissipate with strong views on expected continued growth in 2012 as compared to the last half of 2011. Optimism about the prospects for the US economy over the next 12 months rose 40 points."
However, uncertainly was revealed in manufacturing executives' attitudes toward the world economy's prospects, which they felt "improved somewhat." Forty-five percent of executives surveyed remain uncertain about how worldwide economic conditions will unfold in the coming year, with 11 percent voicing pessimism.
When it comes to international economic conditions, there is hope for those looking to find light at the end of the tunnel. Optimism about the world economy's prospects showed a moderate improvement, up 28 points to 44 percent on a quarter-to-quarter basis, but reaching the same level now as it was a year ago. Cautious optimism had been as low as 7 percent in the third quarter of 2011. In first-quarter 2012, 36 percent of the panelists marketing abroad viewed the world economy as growing up 20 points from the prior quarter. Sixteen percent believed it was declining, off 20 points from the fourth quarter, and 48 percent said they saw no change.
Fifty-three percent of those surveyed reported oil and energy prices remain barriers to growth, while lack of demand and legislative and regulatory pressures were also viewed as important obstacles to growth over the next 12 months.
Good news was found on the job creation front. Half of the industrial product manufacturers surveyed plan to add employees to their workforce over the next 12 months, up 13 points from the prior quarter. Only 7 percent plan to reduce the number of full-time employees, while 43 percent will stay about the same. Most employers will be looking to hire production workers and skilled labor, along with professional and technicians, the survey revealed.
The manufacturing barometer found expansion should take place slowly. Fifty-three percent of US industrial products manufacturers surveyed plan major new investments of capital during the next 12 months, off 14 points from the prior quarter's high of 67 percent, but 4 points above a year ago. Forty-two percent of those surveyed plan to expand their facilities over the next 12 months.
Overall, 91 percent of industrial manufacturers surveyed believe technology is important in achieving the strategic objectives of their business, with 53 percent stating it was very important and 38 percent somewhat important. Only 9 percent felt technology was not important. Virtually all industrial manufacturers, a full 98 percent, have used technology to improve performance in a wide array of areas to help achieve the strategic objectives of their business.
Slightly more than half the panelists plan to revise their business models to address new commerce and communication demands with their customers. Over the next one-to- two years, 93 percent of industrial manufacturers plan to implement new technologies to meet the needs of consumers, customers, and employees to support digital transformation.
Looking at the next 12 months, 82 percent of the 60 executives plan to increase operational spending, off 8 points from last quarter. Leading increased expenditures were new product or service introductions at 52 percent. Forty-seven percent plan to budget for improvements in information technology, while 42 percent plan geographic and facilities expansion. Research and development will take a back seat, off 3 points to 37 percent. Plans for increased marketing and sales promotion and advertising were limited.
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