Quarterly highlights from the Management Barometer survey show a large minority is pessimistic about the US economy and more are growing uncertain about the world economy, signaling more challenges ahead.

Key findings include:

The economic outlook continues to show uncertainty

Four-fifths (43 percent) of surveyed executives are pessimistic and 38 percent are uncertain about the US economic outlook over the next 12 months. Only 19 percent are optimistic that the US economy will grow, down 4 points from the prior quarter. A growing number (42 percent) now report uncertainty about the outlook for the world economy as well. The same number, 42 percent, are optimistic that the world economy will grow, but this is down 11 points from the prior quarter. Unlike their outlook on the US economy, a limited number of executives are pessimistic toward the world economy (43 percent vs. 16 percent).

Oil/energy prices and market demand top the list of barriers to growth

The impacts of oil/energy prices and market demand were cited as major barriers to own-company growth (62 percent each). Two other concerns rose sharply: monetary exchange rates (47 percent, up 11 points) and decreasing profitability (44 percent, up 6 points). Anxiety about capital constraints doubled to 34 percent, likely fueled by the current credit crisis.

Expected barriers to growth over next 12 months:

Oil/energy prices	62%
Lack of demand	62%
Monetary exchange rate	47%
Decreasing profitability	44%
Legislative/regulatory pressures	35%
Capital constraints	34%
Pressure for increased wages	30%
Competition from foreign markets	23%
Lack of qualified workers	23%
Higher interest rates	18%
Taxation policies	18%

Overall, the 12-month revenue outlook remained positive

Own-company revenue projections remained positive for 74 percent (off 7 points). However, in the face of growing pessimism, senior executives of US-based multinationals have reset their revenue targets, lowering them, on average, nearly a full point from 5.4 percent in the prior quarter to 4.5 percent. Largely responsible for these lowered projections, the oil/energy-vulnerable majority plans a 4.2 percent revenue growth rate versus 5.2 percent for all others, or 19 percent lower.

International sales remained strong

In 1Q 2008, 57 percent of international marketers reported increased sales abroad, 41 percent stayed about the same, and only 2 percent reported decreases. Looking ahead over the next 12 months, the projected contribution of international sales to total revenues is up slightly to 28 percent.

Gross margins tightened

Concern about profitability overall was reflected in tight 1Q 2008 gross margins: 28 percent reported an increase in gross margins, while 31 percent reported a decrease – a net of 3 percent decreasing (compared to a plus 11 percent a year ago). Higher costs were reported by 58 percent (up 3 points) and higher prices by 52 percent (up 11 points). Higher costs and prices effected more companies concerned about oil/energy prices – with 69 percent of this group reporting higher costs and 58 percent raising their own prices.

Plans to add employees slowed

Over the next 12 months, the number of companies that plan to hire new workers fell to 34 percent, off from 40 percent last quarter and 45 percent a year ago. Yet only 13 percent are projecting workforce reductions, the majority says it has no plans to change the workforce. The average net workforce projection is minus 0.1 percent; a year ago, it was higher at plus 1.2 percent.

Most plan new investments, but the rate of investment slowed

Fifty-one percent of surveyed executives reported their companies plan to make major new investments of capital, but new investments as a percent of sales lowered from 7.7 percent the prior quarter to 5.9 percent. Leading categories for increased spending are information technology (42 percent) and new product and service introductions (39 percent). M&A or related activity is planned by 38 percent, off from 45 percent a year ago.

About this survey:

One hundred and twenty-nine executives participated in this survey by telephone between January 28, 2008 and April 23, 2008.

Demographic profile:

--Number of participants	129
--Average # employees	8,531
--Average revenues	$3.28B
--Enterprise revenues	$10.73B
--Market capitalization	$12.60B

For more information about Barometer surveys, including recent economic trend data and topical issues, please visit our web site: www.barometersurveys.com.

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