Top Threat to Manufacturing Growth is Oil and Energy Prices
PricewaterhouseCoopers' Manufacturing Barometer interviewed
70 senior executives through July 15, 2005 in large multinational Industrial
Manufacturing companies about the business climate.
This article summarizes key findings.
NEW YORK, Aug. 2 /PRNewswire/ -- U.S.-based industrial manufacturers are
considerably less optimistic about the global and domestic economies,
according to PricewaterhouseCoopers' most recent Manufacturing Barometer
survey. Just 46 percent of respondents, compared to 70 percent last quarter,
are optimistic about the world economy and only 54 percent, compared to 71
percent last quarter, are optimistic about the U.S. economy. The leading
source of this uncertainty is concern over oil and energy prices.
"Higher oil prices continue to impact manufacturers' 12 month forecast,"
says Jorge Milo, U.S. leader of PricewaterhouseCoopers' industrial
manufacturing practice. "The reduced economic optimism of senior executives
is reflected in lower revenue growth estimates and hiring rates."
The survey shows that higher oil and energy prices have resulted in the
following negative effects:
-- Eighty-eight percent of manufacturers said oil and energy prices have a
strong or moderate negative impact on the U.S. economy.
-- Eighty percent view oil and energy prices as having a strong to
moderate negative impact on consumer confidence.
-- Seventy-four percent cited oil and energy prices as having a strong to
moderate negative impact on profit margins for manufacturers.
Overall, revenue expectations have leveled the past two quarters at 6.5
percent for the next 12 months, down substantially from 2004 Q3 rate of 9
percent. Forty-two percent of manufacturers expect to make major new capital
investments over the next 12 months -- in comparison to 60 percent last
quarter. Finally, only 43 percent of manufacturers are planning to increase
their workforce over the next year -- down 9 percent from last quarter.
"In the past, optimism, growth and investment have rebounded after a
decline. This upcoming period could be an important measure as manufacturers
continue to battle high oil and energy prices in the foreseeable future," said
Milo.
PricewaterhouseCoopers' "Manufacturing Barometer" is developed and
compiled with assistance from the opinion and economic research firm of BSI
Global Research, Inc.
PricewaterhouseCoopers (http://www.pwc.com) provides industry-focused
assurance, tax and advisory services for public and private clients. More
than 120,000 people in 139 countries connect their thinking, experience and
solutions to build public trust and enhance value for clients and their
stakeholders
PricewaterhouseCoopers' Industrial Products practice is a global network
of over 1,000 partners and 17,000 client service professionals who provide
industry-focused assurance, tax and advisory services to over 1,000 public and
private companies in the aerospace & defense, chemicals, forest & paper,
industrial machinery, and metals sectors.
Unless otherwise indicated, "PricewaterhouseCoopers" refers to
PricewaterhouseCoopers LLP, a Delaware limited liability partnership.
PricewaterhouseCoopers LLP is a member firm of PricewaterhouseCoopers
International Limited.
For more information about Barometer surveys, including recent economic
trend data and topical issues, please visit our web site:
http://www.barometersurveys.com
SOURCE PricewaterhouseCoopers
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http://www.pwcglobal.com
http://www.pwc.com http://www.barometersurveys.com
CONTACT:
Jim Clayman, +1-636-405-1672,
jim.clayman@us.pwc.com; or Jonathan Tsucalas, +1-212-601-8267,
jtsucalas@porternovelli.com; both for PricewaterhouseCoopers
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