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Breaking PwC Report: Large Manufacturers Share Economic Outlook

 

By James Sawyer
Senior Editor


While optimistic about their own prospects for revenue growth in the next 12 months, the majority of US industrial manufacturers are leery about the US and global economies, according to the Q3 2012 Manufacturing Barometer, a survey conducted by PwC US.  

“Overall sentiment among those surveyed remains cautious toward the direction of both the US and global economies,” said Bobby Bono, US industrial manufacturing leader for PwC. “Margins remained flat during the third quarter and inventories rose, while concerns rose regarding a lack of demand as a barrier to growth. There was also a notable pullback in capital and operational spending plans for overseas expansion. These factors may point to the continued uncertain global climate and a more guarded approach being taken by industrial manufacturers.” 

During the October 2012—October 2013 period, 82% of respondents believe revenue will grow at their companies. A mere 9% foresee a falloff in revenue. In addition, many respondents plan to add employees, invest in new products and spend more on research and development.  

Net new hiring over the next 12 months is planned by 47% of respondents, up five points from the previous quarter. Staff reduction of full-time equivalent employees is planned by just 7% of those surveyed. 

Despite this apparent optimism, the projected average growth rate for own-company revenue over the next 12 months dropped from 5.6% in the second quarter to 4.6%. This was below the 5% estimate seen in the Q3 2011 Manufacturing Barometer survey. 

In addition, optimism regarding the 12-month outlook for the US economy dropped to 37% in the third quarter of 2012, according to the survey, down 15 points from 52% in the second quarter, but remained well above the record low levels during the same quarter of 2011.  Meanwhile, PwC found sentiment regarding the 12-month outlook for the world economy among manufacturers who market abroad remained low at 29%. While low, this is a 16-point improvement over the second quarter. The majority of respondents (54 percent) expressed uncertainty regarding the 12-month outlook for both the US and global economies.   

“In addition to the uncertainty U.S. industrial manufacturers are facing, they also identified the top three barriers to growth during the next 12 months.  Lack of demand rose sharply to 67% in the third quarter of 2012, from 48% in the previous quarter, followed by legislative/regulatory pressure at 44% and oil/energy prices at 33 percent,” said Bono. 

PwC's Manufacturing Barometer is a quarterly survey of US-based executives in large, multinational industrial manufacturing businesses.  

   


Published Date : 10/24/2012

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