Small and midsize manufacturers are expressing optimism about their business during the second half of the year in spite of concerns about federal regulation and fiscal policies.
Ninety-seven percent of respondents to a survey conducted by buying consortium Prime Advantage expects revenues to be better than or equal to the first half of 2013. Forty-two percent anticipate revenue growth will be higher in 2H 2013 than in 1H 2013.
These sentiments are in line with a similar survey conducted by the Institute of Supply Management (ISM). During its midyear update, ISM reported an increased sense of optimism for the third and fourth quarters of 2013.
There are a number of issues tempering optimism, however, including pricing of raw materials. Focusing on procurement processes was the second most frequently cited concern by Prime Advantage respondents, followed by the cost of baseline materials for components, such as oil and gas.
When asked about which areas of cost pressure respondents are most concerned about, raw materials once again received the most votes, but at the lowest level ever surveyed (63 percent, down from 90 percent in February 2013). Healthcare cost pressures remain a strong concern, as indicated by 61 percent of respondents (up from 57 percent in February 2013 and 58 percent a year ago).
Other top-line findings from Prime Advantage include:
- The level of capital expenditures is expected to increase at 1 out of 3 companies in the second half of 2013.
- Forty-seven percent of companies expect to hire in the next six months and fewer than 3 percent are planning layoffs.
- Concern about upward cost pressure on raw materials has declined sharply from previous periods, (63 percent of respondents expressed concern, down from 90 percent in February 2013).
- The majority of respondents (62 percent) believe fiscal policy uncertainties have had a negative impact on their business and the overall economy.
- Survey respondents identified the top barriers to business growth over the next 12 months: legislative and regulatory pressures (47 percent); oil and energy pricing (39 percent) and lack of qualified workers (32 percent).
The full report is available at www.primeadvantage.com/groupoutlook/.