WASHINGTON, D.C., Oct. 26 -- Manufacturers are feeling good about the near-term economic outlook, with 87% of large companies (1,000 employees or more) and 85% of smaller ones either "very" or "somewhat positive" about their business outlook.

So says the latest NAM/Fortune Manufacturing Index, a quarterly poll of 336 members of the National Association of Manufacturers.

NAM said the bullish outlook is based on continued strong sales expectations. "Fully three quarters of survey respondents indicated that they expect their sales to increase over the coming four quarters," said NAM president John Engler, in a statement.

Although the data show a modest sequential decline, when 90% of large and 87% of small companies were positive, the improvement is dramatic when compared to the period of Q3 2000 to Q2 2003, when less than two-thirds of NAM members were optimistic.

"This report confirms our belief that the economy is gaining strength and will continue to expand throughout this year and next," Engler said. "This is equal to the average of the prior two quarters and 10% above the response given a year ago."

Large firms expect sales to rise 6.1%, the strongest response since the fourth quarter of 1997, when the poll was begun. Smaller companies expect sales to grow by 4.4% over the coming year.

Fifty-five percent of respondents expect to increase capital spending over the coming year. Large and small firms expect to increase employment in the coming year.