Manufacturers Expect Gradual Rebound in ’99

U.S. manufacturers, battered by falling exports and the loss of a quarter-million jobs in the last eight months, are now predicting a gradual recovery in the first half of 1999, according to a survey released Tuesday.

Manufacturing purchasing executives are “cautiously optimistic” about their prospects for next year, and one in three expect their business to be better in the first half of the new year than in the last six months of 1998, the National Assn. of Purchasing Management said in its semiannual survey.

Purchasing executives at non-manufacturing companies were even more optimistic about their business prospects for the first half of next year and they expect revenue growth to exceed this year’s gains.

Of the manufacturing executives surveyed, 36% see improved business in the first half of next year, and an even larger 46% expect improvement by the second half of 1999, the NAPM survey showed. Meantime, 68% of non-manufacturing executives surveyed by NAPM expect business to improve next year.

Manufacturers expect their revenues to rise by 5.2% in 1999, following a 7% increase this year. Non-manufacturing companies expect a faster pace of revenue growth--6.2% in 1999 compared with 4.2% this year.

Still, manufacturers are facing a difficult road ahead with expectations of reduced capital equipment spending and sluggish demand for their exports.

Business spending on new equipment, which has paced factory orders in the current economic expansion, “will not be the driver of the U.S. economy” next year, said Norbert Ore, chairman of NAPM’s manufacturing business survey committee.

Both manufacturing and non-manufacturing executives said they are concerned about rising labor costs, although lower prices for raw materials will partly offset increases in wages and benefits.