(FORTUNE Magazine) – Manufacturers are taking a brighter view of the economy's prospects than they have in a while. According to the latest survey of 363 companies conducted in March by the National Association of Manufacturers and FORTUNE, they expect sales to increase sharply and pricing power to return. All that activity is expected to drive a new round of hiring, along with some moderate wage increases.

For the first time since the survey was conducted in 1997, 100% of the large manufacturers (those employing more than 1,000 workers) said they had a positive outlook. Business confidence had begun to improve in 2002 but then slumped in anticipation of the Iraq War. It has been increasing rapidly since the first quarter of 2003. Big companies expect sales to increase 5.9% over the next four quarters--the most bullish they've been since early in 2000. Small ones figure sales to rise 4.6%. Companies large and small plan to build inventory for the next 12 months--a rare occurrence.

As sales rise, manufacturers hope to claw their way out of deflation, with prices expected to increase between 1.1% and 1.7%. And hiring will bounce upward too. Large companies foresee increasing their headcounts by 1.5%--the fourth consecutive quarterly boost--while small ones could hike their payrolls by 1.9%. Add it up, and the manufacturing sector might generate 247,000 new jobs in 2004, giving the economy a welcome lift.