U.S. industrial manufacturers remain positive regarding the outlook for the U.S. economy in the year ahead, while sentiment pertaining to the world economy remains guarded, according to the Q1/13 Manufacturing Barometer, released by PwC US. According to PwC’s survey, 55% of respondents expressed optimism about the 12-month outlook for the U.S. economy during the first quarter of 2013, up seven points from the fourth quarter, and only 5% were pessimistic.

“Overall sentiment regarding the direction of the domestic economy remained upbeat among U.S. industrial manufacturers in the first quarter,” said Bobby Bono, U.S. industrial manufacturing leader for PwC. “However, management teams are taking a more conservative approach to forecasting top line performance for the year ahead, given the moderate recovery underway and uncertainty pertaining to fiscal policy.”

Reflecting the sustained level of optimism, 78% of respondents forecast revenue growth at their own companies for the next 12 months, while only 5% expect negative results. The projected average revenue growth rate in the year ahead also dropped to 4.3% in the first quarter of 2013, from 5.2% in the fourth quarter of 2012. Still, attitudes pertaining to the outlook for the U.S. continue to contrast with sentiment regarding the international markets, where optimism toward the 12-month outlook was relatively low at 36%, with 45% expressing uncertainty.

With regard to investment spending, 43% of U.S. industrial manufacturers said they were planning major new investments of capital over the next 12 months, off four points from the fourth quarter of 2012 and below a year ago (53%). Plans for operational spending also slowed in the first quarter survey, with 71% of respondents planning increases over the next 12 months, a nine point reduction from the fourth quarter of 2012. Areas where operational spending is expected to increase included research and development, up 14 points to a high of 52%, followed by new product or service introductions (38%), and information technology (28%). Conversely, investment plans for geographic expansion hit a low of 10%, off 18 points from the fourth quarter of 2012.

Plans for M&A activity over the next 12 months dropped to 19% in the first quarter survey, off 16 points from the fourth quarter of 2012. In addition, plans for expansion to new markets abroad decreased 14 points to 9%, indicating a significant slowdown in investments in international markets.

To view the complete Manufacturing Barometer report click here.