Most senior executives at multinational companies in the U.S. and Europe have turned upbeat about prospects for their economies over the next 12 months and boosted revenue targets at their company, according to PricewaterhouseCoopers Management Barometer. But despite executives' growing optimism, new hiring and capital investment plans for the next 12 months remain flat at best.

According to the survey, conducted in the fourth quarter of 2003, nearly 80 percent of U.S. executives, up 19 points from the previous quarter, now think the U.S. economy is growing; and 90 percent, up 7 points , expect their company's revenue to increase in the next 12 months. In Europe, 51 percent, a 15 point increase, think the economy is growing; and 80 percent, a 7 point rise, expect increased revenues.

Forty-nine percent of U.S. executives said they are planning to hire additional workers in the next 12 months, although at very low levels. In Europe, 16 percent plan new hiring, although they expect net hiring to be negative. Fifty-one percent in the U.S. and 45 percent in Europe anticipate major new investments. However, the average level of planned new spending remained modest in the U.S. and declined somewhat in Europe.

More than half of surveyed executives, 53 percent in the U.S. and 59 percent in Europe said their company would consider merger and acquisition activity in the next 12 months, including purchases or sales of businesses, as well as equity spin-offs.

The survey also found that executives' concerns for their business are changing: Their number one concern is now competition from foreign markets , cited by 38 percent in the U.S. and 36 percent in Europe. Long-held concerns about weak demand are abating, and are now held by only 34 percent in the U.S. and 26 percent in Europe.

"Business confidence is strong in the U.S and building in Europe. Executives are now turning their attention away from surviving the weak economy, and have renewed their focus on growth and competition," said Frank Brown, global leader of PricewaterhouseCoopers Advisory practice. " The challenge for companies is to translate their anticipated top-tine growth into sustainable profit levels.

"Increased interest in deal making is a reflection of increased confidence," Brown said. "Some companies may see mergers and acquisitions as an alternative to new hiring and capital investments," Brown said.

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