Manufacturers Optimistic About 1998 Revenues, Jobs

U.S. manufacturers are optimistic about the coming year, expecting stronger revenues, increased employment and somewhat higher prices for materials, the National Assn. of Purchasing Management said.

Manufacturers are “more optimistic about the next 12 months than they were in December 1996,” NAPM said in its outlook for 1998. Four out of five companies surveyed said they expect business to improve next year over 1997. And 59% said they are optimistic about the coming year, the largest percentage expressing that sentiment since May 1988.

“We see growth in capital investment; we see prices very stable; we see a slight increase in manufacturing employment,” said Norbert Ore, chairman of NAPM’s business survey committee.

Moreover, the holiday sales outlook is “somewhat brighter” than a year ago and the highest since 1994, the NAPM report said, noting that 59% of those surveyed expect “good” sales, while only 1% expect sales to be “poor.”

Ore said it remains unclear what the impact of Asia’s economic crisis will have on the U.S. economy. “Our members are frankly a little bit on the confused side,” Ore said. So far, he said, NAPM hasn’t seen “any evidence” of order cancellation as a result of recent turmoil in Asia.

Manufacturers surveyed expect their 1998 revenues to rise by 7.8%, following a 7.2% increase this year. Industries expecting the biggest improvement over this year include paper, electronic components and equipment, glass, and photographic equipment, NAPM said.

At the same time, companies surveyed expect the prices they pay for raw materials to rise by 0.3% during the first four months of next year and 0.6% for all of 1998.

Among the industries reporting expectations of higher prices were printing and publishing, textiles, apparel, and wood and wood products, the NAPM said.

Even so, Ore said that amounts to an expectation for low inflation, which should keep interest rates stable next year. “We don’t see a lot on the horizon that says there’s going to be inflation, so that should lead to stable interest rates for most of 1998,” he said.

In addition, the NAPM said its survey included the strongest prediction yet about prospects for job creation since 1991, when the organization first asked this question.