Revenue Growth Projections Decline

July 1, 2007
PricewaterhouseCoopers' (New York) Q2 Manufacturing Barometer, released today, found that U.S. industrial manufacturers are lowering their average revenue

PricewaterhouseCoopers' (New York) Q2 Manufacturing Barometer, released today, found that U.S. industrial manufacturers are lowering their average revenue growth projections for the next 12 months to 5.7%, a decrease from the 8.1% growth rate reported at this same time last year.

The report also reveals that the majority (78%) of manufacturing executives are optimistic about the global economy despite the fact that more than half (53%) cite competition from foreign markets as one of the leading barriers to achieving revenue targets.

The Barometer, a quarterly survey measuring manufacturing executives' thoughts on the business outlook, reports on additional industry and economic issues, such as companies' concerns surrounding monetary exchange and interest rates along with rising oil and energy prices.

“Most U.S. manufacturers believe that the world economy will grow faster than the domestic economy,” said Barry Misthal, partner and Industrial Manufacturing Sector Leader, PricewaterhouseCoopers. “And in order to grow their business they need to compete successfully outside the United States. As more and more of their sales come from abroad, however, it's also apparent that they are keeping a keen eye on foreign competition, which continues to intensify.”

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.

For access to the complete Manufacturing Barometer report, please visit www.pwc.com/manufacturing. For more information about other Barometer surveys, including recent economic trend data and topical issues, please visit www.barometersurveys.com.