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Economic Optimism Slowly Rebounding among U.S. Industrial Manufacturers
More manufacturers in PwC quarterly survey expect positive revenue growth despite plummeting international sales and demand concerns
New York — May 6, 2009 — U.S.-based industrial manufacturers reported a slight uptick in economic optimism, with 16 percent of executives in a recent poll expressing optimism about the U.S. economy over the next 12 months, up 11 points from the previous quarter, according to PricewaterhouseCoopers.
More than half the respondents (55 percent) in PwC's first-quarter Manufacturing Barometer survey remain pessimistic about the U.S. economy, which is an improvement from the 70 percent who were pessimistic last quarter.
Anxieties over international prospects remain high amidst the global recession, as 98 percent of manufacturers marketing abroad agree that the global economy declined in Q1. International sales turned increasingly negative in the first quarter, with more than half (60 percent) of respondents reporting decreased international sales from Q4 2008.
The expected contribution of international sales to total revenues over the next 12 months remained at 36 percent, which is on-pace with last year's findings (35 percent). But, overall revenues will be lower, based on the PwC survey.
"The wide-scale fears of declining international sales, as we reported in previous Manufacturing Barometers, were finally realized during the first quarter of 2009," said Barry Misthal, partner and industrial manufacturing sector leader at PricewaterhouseCoopers. "Manufacturing executives are hoping to ride out 2009 with a focus on making their companies leaner and more efficient, while aligning inventories to match lower demand levels. Taking these kinds of cautionary measures should position manufacturers for a more auspicious start to 2010."
As international prospects remain uncertain, plans for geographic expansion were severely reduced — indeed, only 13 percent of respondents cited such plans. A mere 15 percent of U.S. manufacturers are planning mergers and acquisition activity over the next year, and only 18 percent are planning to expand to new markets abroad.
Forecast for 2010
Looking beyond 2009, senior executives are preparing for a possible turnaround in early 2010. This is reflected in the average revenue growth projections of respondent companies for the next 12 months, which were reported at minus 0.7 percent in Q1 versus the minus 2.4 percent revenue growth projections reported in Q4 2008.
More than half the respondents (55 percent) in PwC's first-quarter Manufacturing Barometer survey remain pessimistic about the U.S. economy, which is an improvement from the 70 percent who were pessimistic last quarter.
Anxieties over international prospects remain high amidst the global recession, as 98 percent of manufacturers marketing abroad agree that the global economy declined in Q1. International sales turned increasingly negative in the first quarter, with more than half (60 percent) of respondents reporting decreased international sales from Q4 2008.
The expected contribution of international sales to total revenues over the next 12 months remained at 36 percent, which is on-pace with last year's findings (35 percent). But, overall revenues will be lower, based on the PwC survey.
"The wide-scale fears of declining international sales, as we reported in previous Manufacturing Barometers, were finally realized during the first quarter of 2009," said Barry Misthal, partner and industrial manufacturing sector leader at PricewaterhouseCoopers. "Manufacturing executives are hoping to ride out 2009 with a focus on making their companies leaner and more efficient, while aligning inventories to match lower demand levels. Taking these kinds of cautionary measures should position manufacturers for a more auspicious start to 2010."
As international prospects remain uncertain, plans for geographic expansion were severely reduced — indeed, only 13 percent of respondents cited such plans. A mere 15 percent of U.S. manufacturers are planning mergers and acquisition activity over the next year, and only 18 percent are planning to expand to new markets abroad.
Forecast for 2010
Looking beyond 2009, senior executives are preparing for a possible turnaround in early 2010. This is reflected in the average revenue growth projections of respondent companies for the next 12 months, which were reported at minus 0.7 percent in Q1 versus the minus 2.4 percent revenue growth projections reported in Q4 2008.
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