U.S. industrial manufacturers remain positive regarding the outlook for the U.S. economy in the year ahead, while sentiment pertaining to the world economy remains guarded, according to the Q1 2013 Manufacturing Barometer, released April 16, 2013 by PwC US. According to PwC's survey, 55 percent of respondents expressed optimism about the 12-month outlook for the U.S. economy during the first quarter of 2013, up seven points from the fourth quarter, and only five percent were pessimistic.
"Overall sentiment regarding the direction of the domestic economy remained upbeat among U.S. industrial manufacturers in the first quarter," said Bobby Bono, U.S. industrial manufacturing leader for PwC. "However, management teams are taking a more conservative approach to forecasting top line performance for the year ahead, given the moderate recovery underway and uncertainty pertaining to fiscal policy."
Reflecting the sustained level of optimism, 78 percent of respondents forecast revenue growth at their own companies for the next 12 months, while only five percent expect negative results.
The projected average revenue growth rate in the year ahead also dropped to 4.3 percent in the first quarter of 2013, from 5.2 percent in the fourth quarter of 2012.
Still, attitudes pertaining to the outlook for the U.S. continue to contrast with sentiment regarding the international markets, where optimism toward the 12-month outlook was relatively low at 36 percent, with 45 percent expressing uncertainty.
In addition, the projected contribution of international sales to total revenue over the next 12 months declined to 32 percent, as compared to 38 percent in the fourth quarter of 2012.
Forty-three percent of U.S. industrial manufacturers said they were planning major new investments of capital over the next 12 months, off four points from the fourth quarter of 2012 and below a year ago (53 percent).
Plans for operational spending also slowed in the first quarter survey, with 71 percent of respondents planning increases over the next 12 months, a nine point reduction from the fourth quarter of 2012.
Areas where operational spending is expected to increase included research and development, up 14 points to a high of 52 percent, followed by new product or service introductions (38 percent), and information technology (28 percent). Conversely, investment plans for geographic expansion hit a low of 10 percent, off 18 points from the fourth quarter of 2012.
Plans for M&A activity over the next 12 months dropped to 19 percent in the first quarter survey, off 16 points from the fourth quarter of 2012. In addition, plans for expansion to new markets abroad decreased 14 points to nine percent, indicating a significant slowdown in investments in international markets. "Overseas expansion plans have fallen off notably during the past four quarters, with the first quarter survey showing a 26-point reduction from last year," said Bono. "It is clear that companies are keeping their cash closer to home and are waiting for clarity on the world stage before making decisions on investing internationally."
New hiring plans over the next 12 months were reported by 45 percent of industrial manufacturers, off 13 points from 58 percent in the fourth quarter of 2012. Still, overall composite workforce projections rose from 0.5 percent in the fourth quarter
to 1.0 percent in the first quarter, as a few industrial manufacturers are planning to add large numbers of new employees over the next 12 months.
~ LCP ~
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~ LCP ~
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