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Summer slowdown or tough times ahead?

Are the results of a recent Business Optimism Index the signs of an impending summer slowdown, or are tougher times ahead? Only time will tell.

U.S. manufacturing leaders have turned pessimistic regarding the U.S. economy, according to Grant Thornton LLP’s most recent Business Optimism Index, a quarterly survey of U.S. manufacturing business leaders. Only 40 percent believe the U.S. economy will improve in the next six months, down from 60 percent three months earlier.  At the same time, 26 percent believe the U.S. economy will get worse, up from 3 percent.

 

                                                                                    5/2011             2/2011

Believe U.S. economy will improve                           40%                 60%

Believe U.S. economy will get worse                         26%                   3%

Very/somewhat optimistic about own business           80%                 91%

Very/somewhat pessimistic about own business         20%                   9%

Plan to increase staff                                              44%                 44%

Plan to decrease staff                                              16%                  6%

 

“There are many factors causing concern amongst U.S. manufacturing leaders,” said Wally Gruenes, Manufacturing Practice Leader at Grant Thornton LLP.  “Soaring energy and raw material costs and Japanese manufacturing supply chain disruptions are weighing heavily, as are unresolved U.S. debt reduction issues and a corporate tax rate that still puts the U.S. at a global competitive disadvantage.  Lower effective tax rates will encourage investment and business activity, spur job creation, and ultimately increase national wealth. Tax reform should benefit the dynamic manufacturing businesses that are the backbone of American economic growth and the driving force behind expanding employment. Included in this category are many privately held businesses, the Russell 2000 and similar groups.” 

About the Grant Thornton Business Optimism Index

The Grant Thornton Business Optimism Index was started in 2002 and is a quarterly survey of U.S. business leaders, comprising three key economic measures:

U.S. economy: Business leaders’ perceptions of whether the U.S. economy will improve, remain the same or deteriorate in the next six months.

Business growth: Business leaders’ perceptions about the growth of their own business over the next six months.

Hiring expectations: Whether business leaders expect the number of people their company employs to increase, remain the same or decrease in the next six months.

The survey was conducted May 19-June 3, 2011 by an outside polling organization, with a total of 377 senior executives from various industries across the country responding. Of those, 50 were from manufacturing.  To see the complete survey findings, please visit www.GrantThornton.com/BOI.
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