US Manufacturers Look Homeward as World Economy Cools

Oct 16, 2015

In the face of global uncertainty, US manufacturers look for domestic sales to grow and are planning to invest in operational spending but not employees.

When it comes to sales and investment, American manufacturers are taking Dorothy’s advice from The Wizard of Oz: “There’s no place like home.”

Only 23% of manufacturers are optimistic about the direction of the global economy, according to the Q3 2015 Manufacturing Barometer, a survey of senior executives at large U.S. industrial companies released by PwC US. That’s down from 38% three months ago. Some 23% said they are pessimistic about global prospects and 40% said they believe the world economy is in decline.

This was in sharp contrast to their outlook for the United States economy. Six out of 10 executives said they remained positive about the domestic economy, though that was 9 percentage points lower than in the second quarter.

Despite their caution, manufacturers raised their revenue forecast for the next 12 months, to 5.3% from their 4.9% prediction of three months ago.

“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,” said Bobby Bono, PwC’s U.S. industrial manufacturing leader. “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.”

Source: Industry Week