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By Hilary Johnson
Manufacturing sector CFOs are still gloomy about the U.S.
economy, but getting less so as they think about 2010, according to the results
of a Bank of America Merrill Lynch survey.
Two-thirds of the 601 financial executives surveyed said the
economy will expand next year, which compares to less than a third who thought
that 2009 would see some growth, the survey showed. A clear majority (88
percent) said the efforts of the Federal Reserve to stabilize and encourage
economic growth have helped.
Specifically within the manufacturing sector, 59 percent of
CFOs surveyed said they expect expansion in 2010, which is more than twice the
number who thought that the sector would grow this year (25 percent).
Manufacturing CFOs are now about as optimistic as they had been in 2004, Bank
of America Merrill Lynch reported.
Revenue growth will be better next year, 61 percent of
manufacturing CFOs noted, compared to just 50 percent who expected growth this
year. More CFOs also said they will spend more on capex in 2010. CFOs who cited
more capex spending rose to 26 percent, from 20 percent last year.
The current economic situation still gets dire marks,
however. CFOs rated the current U.S. economy a 44 out of 100, which is the
lowest score since the survey began 12 years ago.
And it’s affected everything in their businesses, CFOs
indicated, especially expansion. More than half of manufacturing CFOs surveyed,
the highest ever number in the survey history, said they had delayed or
canceled expansion plans as a result of the poor economy.
Looking forward, however, even though most expect a higher
cost of capital, close to 70 percent of CFOs surveyed are considering
financing, to help boost working capital and pay for those capital
expenditures.
Revenue growth and cash flow were the top concerns in this
year’s survey, conducted by phone between mid-August and mid-October, from a
sampling of 601 CFOs, finance directors and other executives selected randomly
from U.S. manufacturing companies with annual revenues of between $25 million
and $2 billion. That contrasts with findings from last year, and with many
years prior, when manufacturing CFOs said they were most concerned about the
cost of materials and energy.
The survey results also showed that the manufacturing sector
may not budge unemployment numbers, since more than 60 percent of CFOs said
they will not change the size of their labor force.
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