Procurement executives expect the U.S. economy's vigor to continue throughout the year, boosting manufacturing revenue in 1999, according to the National Association of Purchasing Management's midyear report.
Nearly 62% of the purchasers polled said 1999 revenue will be higher than in the prior year. However, revenue growth is projected to rise only 4.3%, compared with 5.2% predicted in December 1998.
While revenue growth prospects aren't as aggressive as they were six months ago, purchasers are still optimistic.
"The top concerns weren't as strong as in recent years," said Norbert J. Ore, C.P.M., chairman of the NAPM Manufacturing Business Survey Committee and director of corporate purchasing at Chesapeake Corp.
The economy, which has been the leading worry among purchasers, was mentioned only 6.6% of the time by purchasing executives, compared with 20.3% in December 1998, according to the NAPM report.
While the economic environment remains a potential hindrance to growth, electronics OEM purchasers said there are signs that business conditions remain in their favor.
"I'm looking at some of the pricing and market conditions of the components I buy-they're lower, which I think is good," said Lori Hawker, global commodity manager for SGI, Mountain View, Calif.
Electronics is one of several industries that will be a positive contributor to the U.S. manufacturing economy this year. "Electronics has been benefiting from strong new orders and production, and lower import prices help the industry to a degree," Ore said. "All of those combine to make the electronics sector one of the hot potential performers."
A recession early next year could spoil the recovery in the U.S. manufacturing sector, he said. The threat of an inventory buildup will be a throwback to any rebound.
Approximately 35% of the NAPM's members said they plan to place additional inventory on their shelves in the October-November time frame, Ore said.
"At this point, we're evaluating it not due to component availability, but to the Y2K risk," said SGI's Hawker. "We're planning on evaluating that in the last quarter."