United States manufacturers indicated near-record levels of optimism regarding the sector’s economic health in the National Association of Manufacturers (NAM) first-quarter outlook survey – thanks in large part to the Tax Cuts and Jobs Act – but challenges remain, including attracting quality workers.
Optimism among surveyed manufacturers registered the second-highest level recorded (93.5 percent) in the 20-year history of the survey, which also revealed all-time highs for projected employment growth, capital spending and inventories.
Projected wage growth marked its fastest pace in 17 years, and projected sales growth hit its second-highest reading in 20 years.
“Empowered by tax reform and regulatory relief, manufacturers are now investing in our people through new jobs, higher wages, bonuses and growing our operations right here in the United States,” said NAM president and CEO Jay Timmons. “We’re delivering on our promises, despite what the doubters, deniers and detractors said.
“To keep this momentum going, to take us to the next level, manufacturers now want to see action on infrastructure, further regulatory relief and more opportunities to sell our products overseas. Manufacturers are proving that when the President and lawmakers deliver on policy, we will deliver for the American people.”
The Manufacturer’s Outlook Survey, conducted by Chad Moutray, NAM’s chief economist, queried the association’s membership of 14,000 large and small manufacturers on a quarterly basis for the past 20 years to gain insight into their economic outlook, hiring and investment decisions and business concerns.
In the latest survey, they project record-setting growth rates for capital investments, full-time employment and inventories over the next 12 months. The percentage of manufacturers who believe the country is on the right track (67.6 percent) increased since the last survey, while the numbers of those who believe we are on the wrong track (11.4 percent) or are unsure (21 percent) decreased.
Regarding their own companies, 93.5 percent express a positive outlook, the second-highest reading in the survey’s 20-year history following the all-time high of 94.6 percent in December.
Optimism was at historically high levels over the past five quarters, averaging 92.1 percent.
The outlook index pulled back slightly from 63.7 percent in December (an all-time high) to 63.0 in this survey, which still indicates strong levels of optimism.
Manufacturers indicated an inability to attract and retain a quality workforce is the top business challenge they’re facing for the second straight survey, cited by 74.8 percent of respondents. With robust job growth and an encouraging economic outlook, it has become increasingly difficult to find talent.
“Hiring qualified personnel is really hard,” one respondent in the machinery sector said. “Vocational tech has not been sufficiently emphasized, and it will take time to recover.”
Other challenges include concern over rising health care costs, with respondents anticipating that health insurance premiums will increase 7.7 percent over the next 12 months, and the rising cost of raw materials.
For more information, including the full report, visit www.nam.org/outlook.