Survey: U.S. Manufacturers Expect to Pull Back Capital Spending Over Next 12 Months

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Researched by Industrial Info Resources (Sugar Land, Texas)--U.S. manufacturers expect to see a 0.3% drop in capital investments during the next 12 months, according to the results of a recent survey. The National Association of Manufacturers (NAM) says its first-quarter member survey indicates a "continued decline in sentiment among manufacturing executives".

Industrial Info is tracking U.S. manufacturing projects worth $58 billion that are scheduled to kick off within the next 12 months.

Click the image at right for a graph detailing U.S. manufacturing project kickoffs by market region.

The survey report indicates "anxiety over the faltering global business climate," according to a statement by NAM. "In fact, more than 70 % of respondents felt that the U.S. Federal Reserve should wait until the economy improves before considering additional rate hikes." Federal Reserve officials are scheduled to meet this week to decide whether to raise interest rates."

The expected 0.3% drop in capital investments over the next 12 months contrasts with an expected increase of 0.1% in the association's survey results three months earlier. This was the first negative reading for the measure since December 2012, according to the association.

Smaller manufacturers were looking at reducing their capital spending plans more than larger manufacturers (those with 500 or more employees). Small and medium sized companies predicted a decrease of 0.4% in capital investments, while large entities predicted spending growth of 0.3%. "Among all firms, almost 30% expect capital expenditures to decline over the next year, with 14.1% predicting a decrease of more than 10%," according to the survey report.

NAM's overall Manufacturing Outlook Index was 38.6, down from 40.7 in December. In the survey, 56.6% of manufacturers indicated they were either somewhat or very positive about their own company's outlook, representing the fifth consecutive lowering in quarterly sentiment, down from 91.2% in the fourth-quarter of 2014. Larger manufacturers, who are more likely to be engaged in international trade, were the least upbeat, according to the association.

The Institute for Supply Management's (ISM) latest Report on Business, indicates economic activity in the manufacturing sector contracted in February for the fifth consecutive month. The ISM's Purchasing Managers Index (PMI) was 49.5, which is up by 1.3 percentage points from the January reading, but still indicative of a contraction.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.