U.S. manufacturing executives expect to see significant improvement in business by the second half of next year, but they forecast spending by their firms will drop sharply in 2002, the National Association of Purchasing Management (NAPM) said on Tuesday. 

In its semiannual report issued at a New York conference, NAPM, which will change its name to The Institute for Supply Management effective Jan. 1, 2002, said 59 percent of purchasing managers saw their firms' revenues higher in 2002 than in 2001. 

The report said manufacturers were ``less than bullish'' for the prospects for the first half of next year and on average they expected employment to fall 0.5 percent in the next 12 months. 

Manufacturing spending was forecast to fall 14.4 percent in 2002 versus 2001 while capital expenditures by non-manufacturing firms was seen falling 3 percent, the report said. The survey of purchasing managers also found that most saw the outlook for 2001 holiday retail sales not as bright as either last year or in 1999.