In the latest NAM Manufacturers’ Outlook Survey, 88.8% of respondents felt either somewhat or very positive about their company outlook, up from 86.8% in the fourth quarter, though it’s important to note that the survey was conducted Feb. 11–25, which was mostly before the Russian invasion of Ukraine and the resulting crisis and disruption.
Manufacturers expect full-time employment to rise 3.7% over the next 12 months, just shy of the record in September (3.8%). With that in mind, respondents also anticipate employee wages rising over the next year at 3.9% on average, the fastest pace in the survey’s history. Meanwhile, manufacturers expect raw material costs to rise 7.1%, not far from the 7.5% reading in June of last year. Manufacturing companies forecast 6.1% growth in prices for their products over the next 12 months, a record inflation rate for the survey.
Supply chain challenges topped the list of primary business challenges in the first quarter, cited by 88.1% of respondents. Other top challenges in the first quarter include increased raw material costs (85.7%), the inability to attract and retain a quality workforce (79.0%), transportation and logistics costs (72.7%) and rising health care and insurance costs (48.6%).
Just 2.6% anticipate supply chain disruptions to end in the first half of 2022, but 40.4% expect them to improve in the second half of this year. Overall, 72.8% of respondents predict that supply chain disruptions will abate by the end of the first half of 2023.
Following weaker data in December and January, manufacturing production grew by a solid 1.2% in February, the fastest monthly gain since October. These data speak to the resilience of the sector amid still-solid demand despite numerous challenges.
Manufacturing capacity utilization jumped to 78.0% in February, the strongest reading since September 2018. Overall, manufacturing production has risen 7.4% year-over-year, with 2.9% growth relative to February 2020’s pre-pandemic pace.
