Just as suppliers were managing to push through price increases, it looks as if consumer product companies are getting serious about cutting costs as the economy faces an uncertain future.

According to Deutsche Bank analyst Bill Schmitz  companies have adjusted to the slower growth and rising input costs by “reversing course” and focusing on raising their own prices and cutting operating costs.

In a note to investors, Mr. Schmitz wrote “We remain somewhat cautious on the group as growth slows and currency, pricing, trade down and input costs remain wildcards, although macro uncertainty should preserve multiples in the current environment.”

He worried that cost-cutting would lead to lay-offs and that those cutbacks would hurt the companies long-term.

“While the companies may equivocate with broad rhetoric, we expect that the majority of productivity savings will come from employee reduction, and we question the longer-term sustainability of this approach, wondering when the baby goes with the bath water,” he wrote.

Procter & Gamble is well-positioned, he said.

“Excluding a few outliers, there is a clear scale advantage when looking at sales per employee, with P&G at the top of the list.

Schmitz wrote, “On a sales per employee basis, Clorox, Church & Dwight and P&G have the highest ratios, with Estee Lauder, Avon, Energizer and Newell the lowest, noting that Estee’s hybrid manufacturing/retail and Avon’s direct selling model skew these results.”