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Manufacturers turn cautious on global economic outlook

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Among the minority of panelists planning to hire within the next 12 months, the most sought-after employees will be blue collar/skilled labor (23%) and professionals/technicians (25%). Limited white collar support, middle management and sales/marketing hiring is planned.  "The drop in hiring plans may indicate an expectation for slower growth in the near future," Bono added.  "Management teams will likely intensify avenues to improve productivity across their organizations, while continuing to search for professionals with strong technical skills."

Despite the tempered global outlook, 37% of US industrial manufacturers surveyed plan major new investments of capital during the next 12 months, up slightly from the second quarter and same period last year.  In addition, the mean investment as a percentage of total sales was a moderately high 5.6%, well above 3.3% in the second quarter and on par with 5.7% in last year's third quarter.  Operational spending plans remained healthy as well with 82% indicating plans to increase operational spending, up from 75% in the second quarter and 69% last year.  Leading increased expenditures were new product or service introductions (48%), research and development (37%), business acquisitions (23%) and information technology (22%).

"Companies are doubling down on what they do best and aggressively building their competitive moats." "In the face of global uncertainty and the impact of a strengthening US currency, management teams continue to focus investment on developing new products and driving innovation in an effort to sustain and build market share," Bono added.  "Companies are doubling down on what they do best and aggressively building their competitive moats.  At the same time, they are continuing to pull back from overseas expansion, with only five percent indicating plans to open facilities abroad."

Looking at perceived barriers to entry, monetary exchange rate became the leading headwind to growth over the next 12 months, as indicated by 38% of respondents.  A year ago, it was 24 percentage points lower.  Typical barriers to growth—lack of demand (32%) and legislative/regulatory pressures (25%)—were lower as monetary exchange rate took center stage.

PwC also surveyed respondents on investment in information technology, and found that 80% of manufacturers report having a multiyear plan (3-5 years) that addresses business capabilities and processes as well as IT systems.  Industrial manufacturing companies' IT investments are made primarily to reduce costs (84%) and support growth (72%).  Overall, 90% are planning to invest in IT technologies over the next 12-18 months, with upgrading infrastructure the leader at 82%. 


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