NEW YORK, Nov. 15, 2006 (PRIMEZONE) -- Nearly two-thirds of U.S. consumer products companies (64 percent) are optimistic about the U.S. economy over the next 12 months, up from 61 percent last quarter, according to PricewaterhouseCoopers' Retail & Consumer Industry Practice's Consumer Products Barometer, released today. A significant portion of the companies -- 60 percent -- also expressed optimism about the world economy. However, 53 percent are still concerned about energy prices and 32 percent see lack of demand as a barrier to growth.
"U.S. consumer products companies remain optimistic about the economy, although oil and energy prices continue to be a source of concern," said John Maxwell, leader of PricewaterhouseCoopers' Retail & Consumer Industry Practice. "Lack of demand is emerging as a new top concern, possibly influenced by the high energy prices of the past few months."
Seventy-two percent of executives surveyed believe the domestic economy is growing, with 83 percent expecting positive revenue growth over the next year. These numbers have decreased since last quarter, when 84 percent expressed a belief in domestic economic growth and 91 percent predicted positive revenue growth. This quarter, the average growth forecast fell to 5.7 percent from 6.2 percent in the second quarter.
Most executives reported steady gross margins; 49 percent said their margins stayed the same from the second to the third quarter. Margins increased for 28 percent and decreased for 23 percent. Many companies (30 percent) increased their prices, while 43 percent had higher costs.
Despite the sunny outlook of most U.S. consumer products companies, hiring plans decreased. Only 28 percent were planning to add workers over the next 12 months, bringing the percentage of net new employees in the workforce to minus 1.4 percent.
However, the subset of companies that cited energy prices as a barrier to growth reported an expected workforce drop-off of minus 1.9 percent. These companies also forecast lower revenue growth, expressed lower domestic and world economic optimism and had lower gross margins in the quarter than those not concerned about energy prices. However, the energy-vulnerable group planned more major new investments of capital than their consumer products peers.
More than four in 10 (43 percent) of all the companies plan to make major new investments of capital within the next year. These investments are expected to average only 4.7 percent of revenue, with approximately half of companies putting money into information technology (51 percent) and new product or service introductions (47 percent). Additionally, 66 percent of executives are considering other business ventures, mainly mergers and acquisitions (43 percent).
U.S. Consumer Products Companies Embracing Corporate Social Responsibility
This quarter, the Barometer asked U.S. consumer products companies about their involvement in corporate social responsibility (CSR) initiatives. Most of those surveyed -- 63 percent -- reported having a formal CSR program. These CSR plans cover responsible product marketing (93 percent), ethical sourcing (93 percent), minimizing production pollution and waste (87 percent), end-of-life product disposal (83 percent) and energy conservation (70 percent).
Forty-two percent of these companies have a proactive program for removing harmful emissions from the air and 13 percent have a program to reduce global warming.
"As CSR programs become more mainstream, many have come to realize that these efforts not only make a positive difference in the world, but also make good business sense," said Maxwell. "We will see more and more consumer products companies enact formal CSR programs in the future."
Note to editor:
PricewaterhouseCoopers' Consumer Products Barometer is a survey comparing the views of 47 senior executives in the consumer products industry with an all-industries cross-section of 130 business leaders. Interviewing on the 3Q business climate was completed on November 3, 2006.
PricewaterhouseCoopers Retail & Consumer Industry Practice's Consumer Products Barometer is developed and compiled with assistance from the opinion and economic research firm of BSI Global Research, Inc. For more information about Barometer surveys, including recent economic trend data and topical issues, please visit our web site: www.barometersurveys.com.
PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 140,000 people in 149 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice.
"PricewaterhouseCoopers" refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.