Manufacturing firms brim with optimism

Manufacturing companies in the BRIC (Brazil, Russia, India and China) nations are optimistic about their growth in the next 12 months on expectations of a strong demand following signs of improving economic conditions, a KPMG survey has said.

The manufacturing sector companies across the BRIC region highlight a strong and broad-based rebound in sentiment following the drop seen in the aftermath of the financial crisis, according to the summer 2009 KPMG Business Outlook Survey.

"Optimism is underpinned by expectations for strong demand, coupled with signs of improving economic conditions," the survey stated.

The headline net balance for business activity climbed sharply to 46.5 in July from 3.6 in January, which suggests output levels would rise at a marked pace over the next 12 months.

However, Indian firms are much less upbeat than their counterparts in the BRIC region, although the confidence has still shown a clear improvement in July from January's depressed level, the survey stated.

Indian manufacturers are optimistic on the outlook for their business in coming year, largely as a result of firm demand and improved economic prospects, the survey revealed.

Meanwhile, their confidence remains substantially below 2008 levels and is the lowest in the BRIC region.

A net balance of 22.5 firms expect growth in activity which is an increase from negative 1.6 in January, it added.

Confidence is highest in Brazil, while firms in Russia and China also predict robust rates of expansion, the survey of around 1,800 manufacturing firms said.

"The BRIC manufacturing sector appears to have swiftly returned to strength following slump in confidence that ensued from last year's global financial crisis. Robust growth is widely forecast based on expectations of improving domestic demand, the success of government stimulus measures and signs of stabilisation in the world economy," KPMG, chairman (high growth markets practice), Ian Gomes said.

The firms are encouraged by prospects for sales growth during the coming year. A net balance of 44.8 firms predicts higher new orders in summer survey.

Consequently, business revenues are set to increase strongly, while expectations for company profits are highest since the survey began in January 2008, it said.

In India, the outlook for business revenues amongst manufacturers is largely positive, with over one-third of respondents anticipating a rise in revenues in year ahead.

Staffing levels in the Indian manufacturing sector may expand over the coming year. The net balance for employment rose to 10 in July from 4.3 in January, although the levels remain far lower than those recorded in 2008, it said.