(Reuters) - Slimmed-down workforces and fatter profit margins brought another round of better-than-expected results from U.S. manufacturers, though some investors worried that the nation's prolonged high unemployment rate threatens continued economic recovery.

Investors scrutinized results from companies including Caterpillar Inc (CAT.N), Tyco International Ltd (TYC.N) and Eaton Corp (ETN.N), with some wondering when strong industrial demand would begin to affect the wider economy and create jobs.

Two-thirds of companies were expected to top Wall Street expectations coming into this earningsseason, so beating by a few cents a share is not enough to excite investors, said Oliver Pursche, president of Gary Goldberg Financial Services.

"So far so good," Pursche said. "What we're hoping to hear is their outlook for the rest of the year, in particular whether they are looking at hiring.

"The more they talk about hiring, the more comfortable we're going to be with that company. If you're hiring people, your business is growing."

Intel (INTC.O) and Caterpillar are among companies that have indicated plans to add workers, Pursche said.

Caterpillar reported a stronger-than-expected quarterly profit, lifted by increased sales of its machines in Asia and Latin America and a sharp rebound in demand in North America, especially from mining customers. It reported a fourth-quarter net profit of $968 million, or $1.47 a share, beating estimates by 20 cents.

The company also forecast it would post a 2011 profit "near $6.00 per share," slightly above the market consensus of $5.86.

Tyco's quarterly earnings more than doubled, beating Wall Street expectations amid sharply higher profits at the industrial conglomerate's security business, which includes the former ADT Worldwide service.

Tyco earnings from continuing operations before special items were 75 cents per share, 7 cents ahead of analysts' average estimate, according to Thomson Reuters I/B/E/S.

STRONG INDUSTRIAL ECONOMY

Other companies keyed to industrial demand continued a trend of beating Wall Street forecasts.

Industrial tool maker Kennametal Inc (KMT.N), which reported better-than-expected fiscal second-quarter results, raised its full-year forecast above Wall Street estimates amid strong demand from industrial and transportation markets.

Timken Co (TKR.N), which makes bearings and specialty steel, reported a fourth-quarter net profit, helped by higher auto and truck production and its ability to push through higher prices.

Eaton's quarterly profits rose by 32 percent, beating expectations on a strong truck market and higher demand for its electrical systems. The maker of hydraulics, truck transmissions and other industrial products also forecast record 2011 earnings, set a stock split and announced a 17 percent dividend increase.

Conglomerate Danaher Corp's (DHR.N) earnings rose 78 percent on sharply higher profits in its industrial components and test-and-measurement segments. The company reaffirmed its 2011 earnings targets.

"We expect the global economy to continue to improve in 2011, lead by the emerging markets," Danaher CEO Larry Culp said on the company's conference call.

Optimism among manufacturing executives is widespread. Sixty-three percent are optimistic about the U.S. economy's prospects over the next 12 months, according to a quarterly survey by PricewaterhouseCoopers released on Thursday.

That marked a 28-point increase over the prior quarter. But fewer than half -- 48 percent -- plan to add employees over the next year, PwC found, partly reflecting concerns about taxes, regulation and soft demand.

"We may now begin to see industrial manufacturers start making business decisions in a less guarded, more confident manner," said Barry Misthal, U.S. industrial manufacturing leader for PwC.

Worries about corporate taxes, especially, may keep U.S. companies from significantly boosting capacity until the second half of the year, said Brian Langenberg of Langenberg & Co, who follows Tyco and Danaher. The U.S. consumer remains constrained by an uncertain housing market, he added.

"Industrial production is increasing on a global basis," Langenberg said. "(Manufacturers) need to increase capital spending.

"When do they have to boost capacity? Now. Where? Not necessarily in the U.S."

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