The latest NAM/IndustryWeek Survey of Manufacturers finds that businesses are generally more optimistic about their current outlook. As shown in the accompanying figure, 88.7 percent of NAM members responding to this survey had a positive outlook – up from 80.2 percent in December and 65.4 percent in September.
The bulk of these responses, 68.3 percent, said that they were “somewhat positive,” up from 55.6 percent last time. This perhaps suggests a level of guardedness not reflected in the top-line figure – that manufacturers are cautiously optimistic overall. With that said, the percentage of those saying that they were “somewhat negative” fell from 17.2 percent to 10.5 percent since December.
These responses suggest that industrial production in the manufacturing sector (NAICS) should be 95.5 in the third quarter of 2012. In other words, industrial production would be 3.9 percent higher in the third quarter of 2012 than in the same time period in 2011.
This more positive assessment carries forward into manufacturers’ forecasts for sales, employment and capital spending plans for the next 12 months. Almost 77 percent of respondents expect their sales to increase in the next year, with the average expected increase being 5.3 percent. Overall hiring and capital spending were predicted to grow by 2.2 percent and 4.1 percent, respectively. Those figures had been 1.8 percent and 2.8 percent in the previous survey. In terms of capital spending intentions, 49.1 percent plan to increase their investment, while 38.4 percent anticipate no changes.
Manufacturing wages are expected to rise by 1.8 percent over the next 12 months, with 56.4 percent of respondents suggesting increases of less than 3 percent. After relatively flat growth in the December surveys, inventories are expected to rise by 1.9 percent over the next 12 months.
Prices for final goods are anticipated to go up by 2.2 percent in the next year, which is only marginally higher than the 2.0 percent stated last time. For the most part, while businesses have been pressured by rising raw material and energy costs in the past year, their ability to pass along these costs has been hampered, with overall core inflation modest. (continue reading…)