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US industry expects a rosy 2019: survey

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US companies expect their current run of good fortune to extend into 2019, with higher profit margins, more investment and continued hiring, according to a survey released Monday.

[WASHINGTON] US companies expect their current run of good fortune to extend into 2019, with higher profit margins, more investment and continued hiring, according to a survey released Monday.

The year-end survey from the Institute for Supply Management also showed some companies may be adapting to life under President Donald Trump's trade war since it began over the summer.

Fewer companies expect to raise prices but many manufacturers are thinking of re-arranging their supply chains and factory locations due to the tit-for-tat exchange of tariffs among the world's major economies.

The survey results contrasted notably with a Business Roundtable survey released Friday, which showed dimming sentiment among US corporate leaders - another sign of mounting fears the economy has peaked.

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In the manufacturing sector, the ISM survey found firms expect to increase capital investments by six percent next year, slower than the 13.4 per cent gain recorded in 2018.

Significantly, few survey respondents cited the Republican-driven 2017 tax cuts as a reason to increase capital spending.

And, of manufacturers who plan to decrease investment, about one in five cited uncertainty from the trade war.

Amid steady hiring and with a dwindling pool of available workers, the share of companies who reported difficulty filling open positions grew over the course of 2018.

Nearly 80 per cent of manufacturers and 73 per cent of companies in the service sector say they are struggling to find workers, compared to about 65 per cent a year ago.

As a result, nearly 60 per cent of respondents reported increasing wages to attract new recruits, up substantially from a year ago.

The survey found about two-thirds of manufacturers are considering finding alternative sources for inputs and reviewing moving some factories due to US tariffs imposed this year on steel and aluminum, as well as US$250 billion in Chinese goods.

Meanwhile, there was a steep drop since Mrs May in the share of companies that expect to raise prices due to the tariffs.

At year end, 52 per cent of manufacturers and 24 per cent of services firms said they planned to raise prices because of tariffs, a decline from seven months ago, when the share was 74 per cent and 50 per cent, respectively.

AFP