Facebook Pinterest Search Icon SourcingJournal_horiz Tumbler Twitter Shape photo-camera graph-trend Shape latest-news icon / user

PwC Survey Shows Only 23% of U.S. Manufacturers Optimistic About Global Economy

Missed Sourcing Journal’s Virtual Sourcing Summit? It's not too late to view all keynotes and panels from the two days. Watch on demand now.

manufacturing PwC

American manufacturers are losing confidence in the domestic economy’s direction but are more cautious about the global outlook, according to a survey released Thursday.

PwC’s third-quarter manufacturing barometer surveyed 60 senior executives of large U.S.-based industrial manufacturing firms between June 24 and Sept. 28. The study found that 60 percent are optimistic about the domestic economy’s prospects over the next 12 months, down from 69 percent in the second quarter, but only 23 percent expressed similar sentiments about the global economy, a sharp slide from 38 percent in the previous quarter.

Furthermore, pessimism about the international outlook rose to 23 percent, while 40 percent of respondents indicated they believed the world economy was declining—up from 25 percent in Q2.

With that being said, company revenue forecasts for the next 12 months grew to 5.3%, compared to 4.9% in the previous quarter.

“U.S. industrial manufacturers became increasingly cautious on the outlook for the global environment as they assessed the impact of the slowdown in China and the strengthening dollar,” Bobby Bono, PwC’s U.S. industrial manufacturing leader, said in a statement. “Despite the downward turn in overseas sentiment, overall domestic growth prospects remained healthy and manufacturers continue to focus on further strengthening core products and services. They are keeping their cash at home and directing investment toward enhancing their value propositions in an effort to remain competitive and drive future revenues.”

No vacancies

As a result of global sentiment slipping, executives said they will scale back hiring, which Bono explained could indicate an expectation for slower growth in the near future. Only 37 percent plan to add employees to their workforce over the next year, down from 52 percent in both the second quarter and the same period last year.

In fact, the total net workforce growth projection was minus 0.2%, indicating further cutbacks.

Among the respondents who do plan to hire, 23 percent are seeking laborers and 25 percent are looking for professionals or technicians.

Yet despite the drop in hiring plans, companies will still spend. Thirty-seven percent of those surveyed are planning major new investments of capital during the next 12 months, up slightly from the previous quarter and the year-ago period, while 82 percent want to increase operational spending, up from 75 percent in the second quarter and 69 percent last year.

Where that money is headed: new product or service introductions (48 percent); research and development (37 percent); business acquisitions (23 percent); and information technology (22 percent).

“In the face of global uncertainty and the impact of a strengthening U.S. currency, management teams continue to focus investment on developing new products and driving innovation in an effort to sustain and build market share,” Bono added. “Companies are doubling down on what they do best and aggressively building their competitive moats. At the same time, they are continuing to pull back from overseas expansion, with only five percent indicating plans to open facilities abroad.”

The survey also found that 38 percent of respondents rate foreign exchange rates as the leading headwind to growth over the next 12 months—a big leap from last year’s 14 percent—while 32 percent cited lack of demand and 25 percent pointed to legislative or regulatory pressures.

Related Articles

More from our brands

Access exclusive content Become a Member Today!