NAM Foresees Strong Growth, Higher Profits, More Hiring

By John S. McClenahen Companies belonging to the Washington, D.C.-based National Association of Manufacturers (NAM) are now more economically optimistic than they have during the past three years. Based on a survey of 75 executives attending the association's board meeting last week, manufacturers are expecting 4% inflation-adjusted GDP growth this year. That figure is a full percentage point above the 3% the executives expected six moths ago and just about the 4.1% annual rate the U.S. Commerce Department says the U.S. grew at during the final quarter of 2003. Overall, the manufacturers surveyed expect a 13.5% increase in their profits this year. Smaller manufacturers foresee a 15.9% increase; large manufacturers expect 11.6%. Some 55.4% of the executives expect their companies to add workers this year, 28.4% expect payroll numbers to stay the same and 16.2% expect to trim their payrolls. The executives expect to increase their capital spending by 8.6% this year, somewhat less than the rate during past recoveries from recession. NAM President Jerry J. Jasinowski attributes the lower figure to "some" continued excess capacity in manufacturing, cash flow constraints and more disciplined capital budgeting. The notion that more capital spending is better is being replaced by a focus on return on investment, Jasinowski relates. Some 63% of the executives surveyed said their companies had not increased outsourcing during the past three years; 37% said they had. Of those companies increasing outsourcing, 54% said the work had gone to U.S. suppliers while 46% said it went overseas.

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