Multinationals Mostly Gloomy About 2003, Fewer Hiring

The latest PricewaterhouseCoopers Management Barometer survey found that executives’ often darkening mood is translating into their business practices. For example, 33% of respondents expect to add workers over the next 12 months, down from last quarter’s estimate of 43%, and the 35% estimated a year ago.

Average work force growth is projected to be flat — just 0.6% in the year ahead-compared to 0.7% both in the prior quarter and a year ago.

The amount of general economic gloominess is growing, the survey found, with 48% of senior executives optimistic about the economy in the next year. That’s down sharply from the 69% who had described themselves as optimistic for the first and second quarters of 2002.  

The survey also found that about a third of senior executives believe the US economy is growing, down from 37% from the second quarter of this year.

Executives said they are receiving mixed signals from international markets. Only 40% are optimistic about the direction of the world economy over the next 12 months – down from 56% in the prior quarter. Some 37% reported an increase in overseas sales, while 14% said overseas sales dropped.

Management Barometer panelists said lack of demand, cited by 47%, is the foremost barrier to growth over the next 12 months. Some 28% cited concerns over decreasing profitability, followed by the 27% who mentioned legislative or regulatory pressures. Some 9% mentioned the impact of foreign exchange.

Expected Revenue Fall

Companies represented in the Management Barometer survey have modestly reduced their revenue growth expectations for calendar 2002 to 5.9%. That’s from 6% and 6.3%, respectively, in the prior two quarters. Looking ahead over the next 12 months, they are now targeting growth of 7.2%, down from the prior quarter’s heady goal of 9.7%, the PwC poll said.

New investments have been scaled back along with revenue targets. Specifically:

• 35% now expect to make major new investments of capital in the year ahead — off from 43% in the prior quarter, and 38% a year ago.   Their planned spending averages 8% of revenues, down sharply from 9.8 % in the prior quarter and closer to their cautious 7.8% of a year ago.
• Those planning new investments are among the more vibrant businesses, targeting 10.3% revenue growth for the year ahead, versus 5.6% for all others. Likewise, those planning new hiring expect to achieve growth of 11.4%, versus 5.2% for the rest.

Management Barometer panelists also reported:

• gross margins were up for 37%, and down for 19%
• costs were down for 30%, but up for 17%
• prices were up for 16%, but down for 21%.

PricewaterhouseCoopers’ Management Barometer is a quarterly survey of executives in large multinational businesses The latest survey covered 155 US-based CFOs and Managing Directors in the third quarter of 2002. For more information about Barometer surveys, go to  this Web site .