PwC: US Business Outlook Improves Among US Manufacturers

PwC: US Business Outlook Improves Among US Manufacturers

Jan 30, 2015

By Bill Koenig, Manufacturing Engineering

Economic sentiment among US manufacturers improved during 2014’s fourth quarter, according to a report issued today by PricewaterhouseCoopers.

PwC’s Manufacturing Barometer indicated that multiple indicators reflected improvement during 2014’s final three months, the consulting firm said in a statement.

Optimism about the US economy over the next 12 months rose to 68% in the fourth quarter. That’s better than the 57% figure in the year’s third quarter, and matched the 68% for the fourth quarter of 2013.

Optimism concerning the world economy improved to 38% from 30%. However, the fourth quarter figure was still down from 47% in 2013’s fourth quarter.

The improvement in the confidence of manufacturers is “leading to increased plans for hiring and operational spending,” Bobby Bono, PwC’s US industrial manufacturing leader, said in the statement. “Management teams are primarily focusing on hiring skilled workers, developing new products and investing in research and development.”

Among the highlights of the survey:

  • Hiring plans: 60% of manufacturing executives surveyed plan to hire over the next 12 months, up from 52% in the third quarter and 48% in the second quarter. The 60% figure matches 2013’s final quarter.
  • Revenue growth: 85% expect revenue growth, down from 86% in the third quarter and matching 2013’s fourth quarter.
  • Investments: 43% are planning major investments, an improvement from 36% in the third quarter and matching the year-earlier period. At the same time, the amount invested is likely to be reduced. Executives responding to the survey said the investments would be 3.3% of sales, down from 5.7% in the third quarter and 4.8% from the last quarter of 2013.

“Management teams appear to be shifting from capital spending to investing in people and products,” Bono said. “However, they have continued to highlight concerns regarding the lack of qualified workers, especially in skilled labor.”

According to the report, 64% of respondents said they need to fill skill gaps. Concerning where the skill gaps exist, 75% said skilled labor, and 41% said middle management.

Asked about hiring needs, 62% identified “engineering/design,” 44% manufacturing and 28% research and development.

The manufacturing barometer is based on a survey of 60 executives at large US-based manufacturers. The interviews took place Sept. 19 to Dec. 22.

 

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