U.S. executives more bullish on jobs, business outlook

RP news wires
Tags: manufacturing, business management, talent management

U.S. executives continued to express stronger optimism for improved business activity over the next 12 months, compared with their European counterparts who anticipate stagnant or even worsening conditions ahead, according to the latest KPMG Global Business Outlook survey by KPMG International.

U.S. manufacturing executives continued to show the strongest sentiment among 6,200 respondents worldwide, with 73 percent expecting improved business activity over the next 12 months, compared with 71 percent in February and 65 percent last October. Meanwhile, among U.S. service industry executives, 65 percent of survey respondents expected higher business activity in the period, compared with 63 percent in February, and 70 percent in October.

"Expectations for greater business activity moved up again among U.S. executives, which is encouraging, but the slight drop in the European Union is likely a sign that market uncertainties continue to moderate global expansion," said Mark A. Goodburn, vice chairman and head of advisory for KPMG LLP, the U.S. audit, tax and advisory firm. "U.S. executives are seeing signs of an increase in business activity, prompting anticipation for stronger revenue flow, profitability and hiring in the coming months.

"Confidence overall in the BRIC nations has declined, but as a direct response to government measures to rein in super-charged economies," said Goodburn. "BRIC nations are far from struggling with market volatility or other external factors like their European counterparts."

Goodburn noted that global survey findings are being compared against low-water marks set as the economy reached bottom during 2009.

"There's no question overall U.S. sentiment is in a significantly better position than in February, though positive mood swings one day can turn sour the next, depending on the day's economic news," said Goodburn. "It appears that stimulus funding has helped the economic engine keep running." He noted that U.S. manufacturing executives expect higher profit, revenue and employment in the coming 12 months, while their service industry counterparts were not as optimistic, though still more positive than February.

"With stronger optimism around capital expenditures and employment, and with many businesses sitting on cash reserves, businesses could spark sustained positive momentum by translating their confidence into greater investment. Until that happens though, this prevailing optimism could keep things idling or achieving small milestones, rather than putting us in the fast lane to strong growth," Goodburn said.

The KPMG survey showed U.S. executives' expectations for higher manufacturing profits rose to 67 percent from 63 percent, but down from 60 percent to 51 percent among BRIC executives and up by only 1 percent to 43 percent in Europe. Globally, profit expectations remained relatively flat over the last three survey periods, at 51 percent in the current poll, 52 percent in February and 50 percent in October.

Anticipated Strong U.S. Manufacturing Hiring
U.S. manufacturing executives coupled their growing enthusiasm for the next 12 months with a significant uptick in the prospects for hiring, with 45 percent of them saying employment will be higher in the coming 12 months, compared with just 34 percent in February. By comparison, the EU also showed a gain, from 24 percent to 29 percent in manufacturing hiring, while the BRIC nations - Brazil, Russia, India and China - showed manufacturing employment expectations down from 40 percent to 32 percent. Service-industry hiring expectations, however, remained flat globally.

"With a generally positive U.S. outlook," said Goodburn, "we've seen a marked increase in CEOs preparing to aggressively pursue growth opportunities by re-evaluating their business models, shopping for acquisition targets, and strategically divesting non-core assets, while at the same time enhancing their risk management to ensure the ship is secure as they transform their organizations."

Following is select data from the KPMG Global Business Outlook Survey:

  U.S. Manufacturing Sector Executives
  --  Business Activity: Optimism continued to grow among U.S. manufacturing
      executives, 73 percent of whom said business activity would be higher
      in the coming 12 months, up from 71 percent in February and 65 percent
      last October; just under 4 percent said it would be lower, down again
      from nearly 5 percent in February and almost 11 percent in October.
      Globally, 60 percent of manufacturing executives expected improvement,
      down slightly from 61 percent in February but still higher than
      October's 57 percent.

  --  Employment: U.S. executives indicated a significant rise in higher
      employment, from 34 percent in February to more than 45 percent in the
      current survey; 40 percent said it would remain unchanged, and less
      than 5 percent said it would be lower, compared with more than 6
      percent in February and as much as 12 percent expecting lower
      employment back in October.

  --  Business Revenue: Seventy percent of respondents expect revenue to
      rise in the coming 12-month period, up from 67 percent in February and
      from 62 percent in October; just 3 percent said revenues would be
      lower, down by half from the February figure of 6 percent, and 12
      percent in the October polling.

  --  Profit: Almost 67 percent of U.S. manufacturing executives expected
      higher profits in the coming 12 months, up from 63 percent in February
      and 60 percent last October; just 3 percent expect lower profits, down
      from 6 percent in February and 14 percent in October.

  U.S. Service Sector Executives
  --  Business Activity: Sixty-five percent of service sector executives
      expect higher activity in the coming 12 months, up from 63 percent in
      February yet still short of the 70 percent that expected higher
      activity last October; 31 percent said activity would be the same in
      the coming period, a slight uptick from the 30 percent mark in
      February; 3 percent who said activity would be lower was unchanged
      from February.

Globally, 53 percent of service executives expected improvement, unchanged from February. Just 49 percent of EU executives in the services sector expected higher activity, down from 53 percent in February, while just 51 percent of BRIC countries' executives anticipated a rise in activity, down markedly from 62 percent in the previous survey.

--  Employment: The percentage of U.S. service sector respondents who
      expected higher employment in the coming year continued to rise
      slightly to 34 percent in the current survey, up from 33 percent in
      February, and from 32 percent October; and 58 percent of the current
      respondents said the employment picture would not change in the next
      12 months, compared with 59 percent in February and 62 percent in
      October.

  --  Business Revenue: Sixty-four percent of executives expected revenue to
      be higher compared in the coming period compared with 61 percent in
      February, but still not as bullish as October, when 69 percent of
      respondents expected higher revenues in the coming year. Thirty-one
      percent expected revenue to be the same in the next 12 months, up
      slightly from 30 percent in February and still higher than the nearly
      26 percent in the October survey.

  --  Profit: Sixty-one percent of respondents expected a rise in profit,
      compared with 60 percent in February; those expecting lower profits
      remain unchanged at 5 percent; and 31 percent expected profits to be
      the same for the period, up from 27 percent in February.

The current KPMG Global Business Outlook Survey is based on responses from 6,200 companies representing manufacturing and service providers in 17 countries. More than 322 U.S. manufacturing executives and 237 U.S. service-industry executives participated.

NOTE: The following grids describe the percentage of executives who anticipate business activity, business revenue, profit and employment will be higher, the same or lower at their company over the next 12 months, as well as those who said they did not know.

MANUFACTURING

  % of
   respondents
                         Higher                    Same
  Bus.
   Activity     US   BRIC  EU    Global  US   BRIC  EU    Global
  June 2010      73    55   56       60   16    35   29       25
  February
   2010          71    68   57       61   19    28   25       22
  October 2009   65    61   51       57   24    31   29       25

  Bus. Revenue  US   BRIC  EU    Global  US   BRIC  EU    Global
  June 2010      70    58   55       57   18    32   25       25
  February
   2010          67    66   53       57   20    27   23       21
  October 2009   62    64   48       54   24    27   27       23

  Profits       US   BRIC  EU    Global  US   BRIC  EU    Global
  June 2010      67    51   43       51   19    36   30       27
  February
   2010          63    60   42       52   23    28   29       23
  October 2009   60    56   38       50   21    32   30       24

  Employment    US   BRIC  EU    Global  US   BRIC  EU    Global
  June 2010      45    32   29       32   40    62   50       51
  February
   2010          34    40   24       29   55    54   52       53
  October 2009   32    35   17       25   53    61   52       53





  % of
   respondents
                         Lower                    Don't Know
  Bus.
   Activity     US   BRIC  EU    Global  US   BRIC  EU   Global
  June 2010       4     9   12       10    8     1    3           6
  February
   2010           5     4   14       10    5     1    4           7
  October 2009   11     7   17       14    1     1    3           5

  Bus. Revenue  US   BRIC  EU    Global  US   BRIC  EU   Global
  June 2010       3    10   15       12    9     1    5           7
  February
   2010           6     6   19       14    6     1    5           8
  October 2009   12     8   21       17    2     1    5           6

  Profits       US   BRIC  EU    Global  US   BRIC  EU   Global
  June 2010       3    11   21       14   11     2    7           9
  February
   2010           6    11   23       17    7     1    6           9
  October 2009   14    10   26       18    5     2    7           8

  Employment    US   BRIC  EU    Global  US   BRIC  EU   Global
  June 2010       5     6   19       11   10     1    2           6
  February
   2010           6     6   21       14    5     1    4           5
  October 2009   12     4   29       18    4     1    2           4

   May not add to 100 % because of rounding.





                                       SERVICES

  % of
   respondents
                         Higher                    Same
  Bus.
   Activity     US   BRIC  EU    Global  US   BRIC  EU    Global
  June 2010      65    51   49       53   31    45   33       35
  February
   2010          63    62   53       53   30    34   30       33
  October
   2009          70    56   50       56   25    39   33       32

  Bus.
   Revenue      US   BRIC  EU    Global  US   BRIC  EU    Global
  June 2010      64    52   46       51   31    42   32       35
  February
   2010          61    61   48       50   30    35   30       33
  October
   2009          69    58   45       53   26    36   33       31

  Profits       US   BRIC  EU    Global  US   BRIC  EU    Global
  June 2010      61    47   39       47   31    45   35       38
  February
   2010          60    57   40       48   27    37   33       33
  October
   2009          64    55   39       49   28    38   30       35

  Employment    US   BRIC  EU    Global  US   BRIC  EU    Global
  June 2010      34    33   25       28   58    63   55       60
  February
   2010          33    36   24       27   59    60   54       59
  October
   2009          32    35   24       27   62    62   53       60





  % of
   respondents
                         Lower                  Don't Know
  Bus.
   Activity     US   BRIC  EU    Global  US   BRIC  EU    Global
  June 2010       3     3   15        9    1     1    3        3
  February
   2010           3     3   13        9    5     1    4        4
  October
   2009           5     4   12        9    1     1    4        3

  Bus.
   Revenue      US   BRIC  EU    Global  US   BRIC  EU    Global
  June 2010       3     5   17       11    1     1    4        3
  February
   2010           3     3   18       12    6     2    4        5
  October
   2009           4     5   18       12    1     1    5        4

  Profits       US   BRIC  EU    Global  US   BRIC  EU    Global
  June 2010       5     7   21       12    3     2    5        3
  February
   2010           5     5   21       12    8     2    6        6
  October
   2009           6     6   24       13    2     1    6        3

  Employment    US   BRIC  EU    Global  US   BRIC  EU    Global
  June 2010       4     4   17        9    5     1    3        4
  February
   2010           4     3   19       10    5     2    3        3
  October
   2009           4     3   19       10    2     1    4        3

   May not add to 100 % because of rounding.

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