U.S. Executives More Bullish On Jobs, Business Outlook Than European and BRIC Counterparts: KPMG Global Survey

NEW YORK, Aug. 2 /PRNewswire/ -- 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.

About KPMG International

KPMG is a global network of professional firms providing Audit, Tax and Advisory services.  We operate in 146 countries and have 140,000 people working in member firms around the world.  The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.  Each KPMG firm is a legally distinct and separate entity and describes itself as such.

About KPMG LLP

KPMG LLP, the audit, tax and advisory firm (www.us.kpmg.com), is the U.S. member firm of KPMG International Cooperative (“KPMG International.”)  KPMG International’s member firms have 140,000 professionals, including more than 7,900 partners, in 146 countries.

Editors: 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.

SOURCE KPMG