U.S. Industrial Manufacturers Expect Lower Growth Rates For Next Year

July 27, 2007
Executives are concerned about foreign competition.

PricewaterhouseCoopers' Manufacturing Barometer reported on July 25 that U.S. industrial manufacturers lowered their average revenue growth projections for the next 12 months from 6.8% (as reported in Q1 of 2007) to 5.7%, a 16% reduction. Additionally, executives are only expecting a 3% revenue growth rate for the industrial manufacturing sector as a whole in the 2007 calendar year.

While optimism in the global economy remains high (78%), more than half (53%) of manufacturing executives cite competition from foreign markets as one of the leading barriers to achieving revenue targets.

The leading threat to revenue growth is the oil/energy impact on increased costs (59%.). Competition from foreign markets follows closely at 53%, which is up significantly from last quarter where it came in at 39%. Monetary exchange rates and interest rates pose additional cause for concern among senior executives. Nearly one-third (30%) of the respondents cited exchange rates as a future barrier to growth, up from 21% last quarter, and 28% considered higher interest rates as another possible barrier to growth.

Yet, despite these threats, 62% of those surveyed are optimistic about the domestic economy, and 69% believe the U.S. economy grew during the second quarter. In fact, 90% of executives think the world economy expanded in the second quarter.

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