Mfg. barometer heads down.

"Economic optimism plummets among U.S. industrial manufacturers," screams PricewaterhouseCoopers in the title of its latest "Manufacturing Barometer" issued for the first quarter on April 29. Only 12 percent of senior executives in the manufacturing sector are optimistic about prospects for the year, down from 29 percent in the fourth quarter of 2007 and 57 percent from the same quarter a year ago. Seventy-five percent of industrial manufacturers said they believed the domestic economy was in decline, while only 5 percent said it was growing. "This is in stark contrast to one year ago, when 69 percent of respondents believed the economy was growing," says the barometer. "Looking ahead, over one-half of these executives (52 percent) are pessimistic about the U.S. economy over the next 12 months, as compared to only 5 percent a year ago."

Barry Misthal, the industrial manufacturing sector leader at PricewaterhouseCoopers, said: "We knew industrial manufacturers were feeling the pressures of the economic downturn, however, the reality of the situation really hit us when we saw this quarter's findings."

Seventy percent of executives expect positive revenue growth over the next year, down 11 points from last quarter. Revenue targets were reset to 4.6 percent, a 15 percent drop from 5.4 percent recorded in the fourth quarter survey. Sixty-eight percent of executives said energy prices are a potential barrier to growth over the next 12 months; 62 percent cited a lack of demand.

"On a positive note, survey respondents indicated that international markets continue to offer opportunities for industrial manufacturers," says the survey. Sales increased for 63 percent of manufacturers selling abroad "and international sales projections remain steady at 35 percent of revenues. Twenty-seven percent of executives plan to expand their markets abroad over the next year, and 25 percent said they would build new overseas facilities. Only 38 percent of executives are optimistic about the world economy, a 26-point drop from the previous quarter and a considerable 45-point drop from one year ago."

"It appears mounting uncertainty about the U.S. economy is starting to affect opinions about the world economy," said Misthal. "However, to weather this economic storm, industrial manufacturers must set their sights on growth opportunities abroad, while at the same time maintain the health of their domestic operations by controlling costs and making selective investments of capital."