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US Manufacturing Survey Shows Mixed Economic Outlook - 2002-03-19

American manufacturers have a mixed outlook on the economy for next year. A new survey suggests confident in a slow but steady recovery, but many companies are still looking to cut costs.

In its annual survey of more than 300 small and mid-sized manufacturers, the National Association of Manufacturers says its members are expecting a two to three percent expansion of the U.S. economy this year.

"There seems to be strong support that recession is over, recovery has begun and things are improving," said Jerry Jasinowski, the association president.

But, he says, there are also signs of continuing economic weakness. The survey found four out of ten manufacturers expect the recession to continue within their industrial sectors. About half the companies say their health care costs are still rising sharply, and that the strong U.S. dollar is hurting their exports. Mr. Jasinowski says that means companies will cut costs and hire fewer new workers.

"Companies are not going to add a lot of employment in this country," he said. "In fact, one of the risks of the [strong] dollar is that companies will move offshore in order to offset that exchange differential." Last year, American manufacturers cut about a million jobs. Mr. Jasinowski does not expect that many layoffs this year.

He says the economic recovery could be hurt somewhat if the U.S. Central Bank raises interest rates - which he does not expect to happen in the near future - or if energy prices rise sharply. "If you were to get another 50 to 60 percent increase in energy prices, it would be enough to jeopardize the recovery later this year," he said.

Mr. Jasinowski noted that petroleum prices have gone up in recent weeks, but he expects increased oil production from Russia to prevent the petroleum prices from rising high enough to hurt the economy.

The National Association of Manufacturers is holding its annual trade show this week in Chicago.