Original Press Release
Both Large and Small Manufacturers Edge Up in the Second Quarter of 2007
Press release date: August 7, 2007
WASHINGTON, D.C., August 7, 2007 - The National Association of Manufacturers (NAM)/Industry Week business outlook survey for the second quarter of 2007 points to confidence edging up from both large and small companies, after declining during the prior four quarters.
"Industry's great untold story is that confidence among large and small manufacturers is on the rise," said David Huether, the NAM's chief economist. "While it hasn't returned to the heights of two years ago, there's a notable improvement from the first quarter of this year. This is the first time in a year and a half that the business outlook improved for both large and small manufacturers."
The survey of 293 NAM member companies showed 80 percent of large and 79 percent of small manufacturers eyeing a positive business outlook for the second quarter of 2007. This is a jump from the 78 and 77 percent of large and small respondents reporting a positive business outlook for the first quarter of this year.
Large manufacturers, those employing over 1,000 workers, and small companies, less than 1,000 workers, recorded their business outlook as well as their 12-month expectation on sales, prices, capital investment, inventories, employment and wages.
The NAM/Industry Week Manufacturing Index is at nam.org/manufacturingindex
Survey highlights include: Sales Expectations. Looking ahead 12 months, both large and small manufacturers expect their sales to continue growing. Small firms expect their sales to increase by 3.9 percent. This is a slower pace than the 4.3 percent expectation in the first quarter as well as slower than the average expectations from 2004 through 2006. Large firms expect their sales to increase by a more-robust 4.5 percent over the next 12 months. This is an improvement from the first quarter.
Pricing Expectations. Both large and small manufacturers expect their pricing power to increase. Large firms expect their prices to rise by 2 percent while small firms expect the prices of their products will increase by a similar 1.9 percent. This is an increase for both small and large firms compared to the first quarter of 2007, signaling that demand is picking up.
Investment Expectations. Looking ahead 12 months, large manufacturers expect their capital expenditures to rise by 2.3 percent, while small companies expect their investment spending to grow by a similar 2.2 percent. For both large and small firms, this is a mirror image of their expectations in the first quarter.
Inventory Expectations. Both large and small survey respondents expect to reduce inventory levels over the next 12 months. Large firms expect to reduce inventories by 1.7 percent while small companies expect to reduce inventories by 0.6 percent over the coming year. For large companies, this marks the 13th consecutive quarter that firms expect to reduce inventories. For small companies, this is the second consecutive decline following very modest increases in inventory investment expectations in 2006.
Employment Expectations. Both large and small respondents to the first quarter survey expect to increase employment over the next 12 months. Large firms expect employment to increase by a modest 0.3 percent while smaller firms expect their employment levels to increase by a stronger 1.7 percent. This is a continuation of a modestly positive long term trend. Since the second quarter of 2005, both large and small survey respondents have had positive employment expectations.
Wage Expectations. Large survey respondents expect wages to increase by 1.9 percent over the coming 12 months. This is similar to the 2 percent expectation reported in the first quarter survey and slightly lightly slower than the 2.5 pace expected in 2004 through 2006. Small companies anticipate wages will increase by a stronger 2.3 percent over the coming year. This is stronger than the 2 percent increase anticipated last quarter and slightly stronger that the 2.2 percent increase expected from 2004 through 2006.
The National Association of Manufacturers is the nation's largest industrial trade association, representing small and large manufacturers in every industrial sector and in all 50 states. Headquartered in Washington, D.C., the NAM has 11 additional offices across the country. Visit the NAM's award-winning web site at www.nam.org for more information about manufacturing and the economy.
CONTACTS: J.P. FIELDER (202) 637-3089 DAVID HUETHER (202) 637-3148