Business confidence could boost freight

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There’s been a surprisingly strong uptick in confidence among U.S. manufacturing executives of late, if the results of a survey conducted by consulting firm KPMG LLP are to be believed – an optimistic outlook for the next 12 months apparently shared en masse by their counterparts in the service sector.

Put those two together, and we could – and I stress the word “could” here – witness continued growth in freight volumes. Though that would keep ramping up demand for drivers, if it also helps spark pay increases and other compensatory measures for those piloting big rigs up and down the asphalt, so much the better.

So, according to KPMG’s latest Global Business Outlook survey (which polled executives at 11,000 companies scattered across 17 different countries, including 250 U.S. manufacturing executives and 122 U.S. service-industry executive) optimism for higher revenues, profits and – more critically – new business in the coming 12 months hit record levels among U.S. manufacturing- and service-industry executives.

The firm said expectations for increased business activity hit the highest level among U.S. service executives and second highest among their manufacturing counterparts since the tri-annual poll began measuring U.S. business sentiment in October 2009.

“A positive economic mood has clearly taken hold among the nation's manufacturing- and service-sector leaders,” noted Lynne Doughtie, the vice chairman-advisory (whatever that title means!) for KPMG.  “U.S. manufacturing executives are more upbeat than their global counterparts, while overall optimism for increased business activity among U.S. service providers is second only to Brazil.”

Globally, nearly 84% of manufacturing executives polled by KPMG for its survey (conducted back in February) said business activity would rise or remain the same in the coming 12 months, while 89% of service-sector respondents said activity would be higher or remain the same. By comparison, 94% of U.S. manufacturing and service executives combined expect the same or higher levels of activity, while more than 99% of U.S. service-sector executives alone project same or higher business activity.

Doughtie pointed to a significant increase in U.S. executives' expectations for higher revenues in the coming 12 months, with 70% of manufacturing executives and 71% of services executives in February saying that they expect increases in revenues, compared with 49% and 52%, respectively, when the survey was last taken in October 2011.

Similar jumps occurred when looking at profitability, he noted, with 69% of manufacturing executives and 62% of services executives expecting to see higher profits, compared with only 43% and 47%, respectively, in October last year.

“Our interaction with U.S. executives in the market confirms the expectation of better times ahead,” said Doughtie. “But while we are seeing many companies taking a deliberate path toward a growth agenda, they remain cautious and have maintained a great deal of focus on achieving compliance in this increasingly complex regulatory environment.”

[Truckers themselves are becoming a bit more growth minded, too, according to the latest survey conducted by Transport Capital Partners – but only a bit, mind you.]

Here’s the big one though: U.S. executives who expect higher (70%) or the same (24%) levels of new business in the coming 12 months reached a record-tying 94%, up from 90% last October. Globally 86% of executives expect higher (54%) or the same (32%) new business in the coming 12 months. And those are the numbers that could translate into more freight for trucking in the U.S.

And folks told KPMG they are putting their money where their mouth is on this one, too, as among U.S. manufacturing executives, more than 32% expect higher levels of capital spending in the coming 12 months, compared with just 19% in October and 22% in June last year.

The survey's record high (35%) for those expecting an increase in capital spending came in June 2010.  Significantly, the number who expected continued levels of capital spending was 52% in February, compared with 60% in October and 56% last June. Just 8% of manufacturing executives anticipate lower capital spending in the coming 12 months.

“We have seen a distinct uptick in capital spending, as companies set their sights on growth,” said Doughtie pointed out.

“Interestingly, in the services sector – which can be an early warning of a downturn and a lagging indicator of improved market conditions – none of the U.S. respondents expects lower profits this year,” he stressed. “That’s the first time any of the 12 countries analyzed in the services portion of the survey were confident enough that none expected net income to slip. That certainly speaks to the potential direction of the marketplace.”

For freight’s sake, let’s hope that’s true. 

Discuss this Blog Entry 1

on Mar 25, 2013

It is great for the future, being confident does matter a lot in this field. This is a good time to explore new horizons especially virtual plain where opportunities are galore for the right people. But take professional help while building your own website so that you could be able to draw the consumers.

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