Economy

American industrial manufacturers’ economic outlook reaches highest level since Q2 2012

PricewaterhouseCoopersData released by PricewaterhouseCoopers on Tuesday showed that optimism among American industrial manufacturers on the economic outlook has reached the highest level since the first quarter of last year.

During the third quarter, 40 percent of respondents in PwC’s Manufacturing Barometer survey said they were optimistic about the world economy over the next year—an increase from 31 percent in the second quarter and 29 percent in the third quarter of 2012.

Sixty percent of respondents expressed optimism regarding the U.S. economy, with an additional 78 percent indicating that the domestic economy grew in the third quarter, up six points from the previous quarter and the highest level since 2006.

Optimism regarding actual revenue contributions over the next year, however, remained low at 30 percent—a decrease of two percent from the second quarter.

“The divergence in viewpoints regarding the U.S. and world economic outlooks narrowed somewhat in the third quarter,” Bobby Bono, the U.S. industrial manufacturing leader at PwC, said. “Optimism regarding the global economy improved, but uncertainty remained prevalent, marked by persistently low expectations regarding the level of international revenue contributions going forward. Despite the uptick in global economic sentiment, the U.S. remains the growth driver in the industrial manufacturing sector, with continued signs of healthy demand, pricing strength, new product investment and hiring. Overall top line growth expectations remain moderate and management teams are continuing to take a careful approach to capital allocation and cost management, while preserving liquidity.”

Eighty-two percent of U.S. industrial manufacturers indicated that they expect positive revenue growth for their own companies over the next year, with only two percent expecting negative growth. The projected averaged revenue growth rate over the next year totaled 4.2 percent, down from 4.6 percent in the second quarter, and 75 percent expect single-digit growth.

Forty-eight percent of industrial products manufacturers plan new capital investments over the next year—an eight percent increase from 40 percent in the second quarter, and 78 percent of respondents plan to increase operational spending.

“Management teams are continuing to focus on boosting organic growth, with an emphasis on new product launches and investment in R&D and technology,” Bono said. “This is indicative of the mixed global outlook and overall moderate revenue growth expectations. In an uncertain environment, industrial manufacturers are managing risk and concentrating on strengthening their products and services. They are doubling down on what they do best in a quest to expand market share.”

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