Major capital spending plans on the rise among U.S. industrial manufacturers

July 17, 2014

Optimism regarding the direction of the domestic economy remained positive among U.S. industrial manufacturers during the second quarter of 2014, according to the Q2 2014 Manufacturing Barometerâ„¢ released by PwC US, New York. In addition to the positive sentiment, the report showed a rise in capital spending plans among industrial manufacturers as they focus on using their cash positions to strengthen their products, add personnel, and secure technology in a competitive market.

Optimism regarding the prospects of the U.S. economy during the next 12 months dropped among U.S. industrial manufacturers to 65 percent during second-quarter 2014, compared to 71 percent in the first quarter. However, sentiment rose slightly from 63 percent in Q2 2013, and none of the respondents was pessimistic regarding the domestic outlook. Of the U.S. industrial manufacturers polled, optimism about the world economy was at 38 percent during Q2 2014, down slightly from 42 percent in the first quarter, but up from 31 percent a year ago. Still, uncertainty regarding the global economic outlook remained high, with 57 percent of respondents indicating uncertainty compared to 50 percent in the first quarter.

Plans for new investments of capital rose notably during Q2 2014, with 52 percent of respondents indicating increased outlays in the next 12 months, up from 39 percent in the previous quarter and 40 percent in Q2 2013. Operational spending plans remained high, with 75 percent of respondents indicating increased short-term spending in the next 12 months, identical to the second quarter. Plans for R&D spending rose significantly to 45 percent, from 34 percent in the first quarter and 38 percent in Q2 2013. Other areas of investment focus included new product or service introductions (43 percent) and information technology (33 percent).

Forty-eight percent of U.S. industrial manufacturers surveyed plan to add employees to their workforce over the next 12 months. This is down from 56 percent in the previous quarter, but remains above the 42 percent reported in last year's second quarter.