Optimism fades among US manufacturers, says survey

New York, Apr 29 | Updated: Apr 30 2008, 05:47am hrs
US manufacturers are much more pessimistic about the US economy and the direction of their businesses than they were three months ago, according to a quarterly survey of senior industrial executives released on Tuesday.

Only 12% of manufacturing executives said they are optimistic about the US economy over the next 12 months, according to the PricewaterhouseCoopers Manufacturing Barometer, while 36% said they are uncertain.

That compares with 29% who said they were optimistic in the fourth quarter, and is down from 57% a year ago. Among a control group of executives in other sectors, 18% were optimistic and 39% not sure. Optimism about the world economy is also waning, according to the survey. Around 38% of respondents said they are optimistic, down from 64 % a quarter ago and 83% in the first quarter of 2007. The declines come amid a US credit crunch and housing downturn that have threatened to tip the economy into recession, said Barry Misthal, the consultancy's industrial manufacturing sector leader.

"The question becomes: How long is the downturn and how far will it reach across the seas" Misthal said. "To the extent that it starts to hit their international markets, then they can be in for a difficult time."

Executives have lowered their estimates for sales and industry growth this calendar year, and more of them said gross margins are falling, while almost two-thirds said their costs are rising. As a result, fewer manufacturers are planning to hire new workers or increase operational spending, according to the survey of 60 manufacturing executives at companies with an average market capitalisation of about $10 billion.