U.S. industrials' optimism is short-range

By Nick Zieminski and James Kelleher

NEW YORK/CHICAGO (Reuters) - Top executives at big U.S. industrial companies were cautiously optimistic about the future, but their optimism did not extend very far for an economy that is slowly making its way to recovery.

Few were willing to predict stronger demand for their products in 2010 after reporting quarterly results, instead limiting themselves to a guarded outlook.

For example, United Parcel Service Inc (UPS.N), the world's largest package delivery service, beat Wall Street's earnings forecast despite a profit decline but said the outlook for the crucial holiday season remained unclear.

The same was true for No. 1 U.S. railroad Union Pacific Corp (UNP.N), whose earnings fell 26 percent but beat expectations slightly. The company said a year-long drop in freight volume tied to the recession seemed to have stabilized, but a quick economic recovery was unlikely.

This earnings season, many companies beat Wall Street's earnings forecasts helped by cost cuts while reporting sales that fell short of expectations, noted analyst Guaylon Arnic of Profit Investment Management, which owns shares of a number of industrial companies, including Danaher Corp (DHR.N).

Overall, this week's earnings reports suggested that prospects for 2010 were still unclear with less than three months to go before the new year, said Arnic.

"The fourth quarter you have such low hurdles because of what happened last year, it doesn't really give you an indication of what demand for these businesses really is," he said. "I'm concerned. There's nothing to suggest we've had a material pickup in a lot of the names I cover."

Industrial conglomerate Danaher posted stronger-than-expected third-quarter profit and sales. It said it expected revenue to grow sequentially in the quarter under way but called the economy "stabilizing yet still challenging."