U.S. manufacturing executives see only one chance in four of a recession this year, and by a wide margin expect profits and exports to be up over 1987 levels, an industry group said yesterday.
The National Association of Manufacturers said a survey of 100 chief executive officers showed high levels of confidence about the economy and little concern about fallout from the Oct. 19 stock market collapse.
"The survey shows that manufacturers are more optimistic than economists," said Jerry Jasinowski, the association's executive vice president and chief economist.
Jasinowski said that as a result of the upbeat survey, he plans to increase the group's forecast of gross national product growth in the first three months of 1988 to between 1 percent and 2 percent from 0.6 percent.
Questioned in the Feb. 5 survey were 100 manufacturing executives who sit on the trade group's board.
Some of the key findings: Eighty-one percent expected no material change in business because of the stock market collapse.
Seventy-eight percent said they anticipated that profits would be up from 1987 levels, with 19 percent expecting profits to be substantially higher.
Seventy-eight percent said that exports would rise in 1988 over last year.
At a time when many economists suggest that a recession is approaching, manufacturers are more optimistic than they've been for years, Jasinowski said.
Jasinowski said that the results were significant and a stark contrast to comments heard from manufacturers from 1982 to 1986, when the association didn't get any positive feedback.
The new optimism is directly traceable to the recent boom in U.S. exports, Jasinowski said. He attributed the export increase to the 50 percent decline in the value of the dollar over the last two years, which has made U.S. goods more competitive abroad, and to cost-cutting by U.S. businesses.
The Commerce Department is expected to release December trade figures Friday. The November report, which showed an improvement, touched off a stock market rally.
Some economists have suggested that one sign of a coming recession is a high accumulation of unsold inventories, as reported recently by the Commerce Department.
But, Jasinowski said, "there seems to be no significant buildup of inventories at the manufacturing level."
Some analysts have suggested that the inventory buildup may be mostly among imported goods.
Of the manufacturers who were surveyed, 84 percent said the Federal Reserve Board should follow an easy credit policy that would keep interest rates down, rather than driving up interest rates to defend the dollar.
The executives were asked to gauge the percentage likelihood of a recession this year. The average estimate was 25.45 percent.