In the latest NAM Manufacturers’ Outlook Survey for the third quarter, 87.5% of respondents felt either somewhat or very positive about their company outlook, down from 90.1% in the second quarter. The data are consistent with solid growth in manufacturing activity, but with some easing from more rapid paces in the second quarter, when the outlook had registered the best reading in nearly three years and some measures had reached record highs.
At the same time, the labor market remains tight, with respondents predicting employment and wage growth to rise at the fastest rates in Outlook Survey history. Respondents also anticipate capital spending to increase by the most since the second quarter of 2018. Workforce shortages were cited as the largest downside risk to the economic outlook, followed by supply chain disruptions, increased cost pressures and rising COVID-19 cases.
Rising raw material costs once again topped the list of primary business challenges in the third quarter, cited by 86.4% of respondents. Other top challenges in the third quarter include the inability to attract and retain a quality workforce, supply chain challenges, transportation and logistics costs and rising health care and insurance costs.
Manufacturing job openings jumped to another record high, from 880,000 in June to 889,000 in July. In the larger economy, nonfarm business job openings rose from 10,185,000 in June to 10,934,000 in July, a new record
Outlook Survey For Q3
Feeling “positive”: A large majority (87.5%) of respondents reported feeling optimistic about their company outlook. This is down from more than 90% in the Q2 survey.
Among the highlights from the survey:
Nearly 94% of manufacturers said that higher taxes would be harmful to their businesses.
Roughly 90% of respondents said that their company would find it more difficult to expand their workforce, invest in new equipment or expand facilities if the tax burden on income from manufacturing activities increased. Nearly 91% said that higher taxes would also make it more difficult to raise employee wages. The top three challenges facing manufacturers are increased raw material costs (86.4%), attracting and retaining a quality workforce (80.0%) and supply chain challenges (79.8%). Stay tuned: The NAM is also launching a major ad campaign calling on Congress to protect manufacturing jobs by opposing tax increases in the budget resolution. The print, radio and digital ads will run in Washington, D.C., and in key states across the country.
Download the full Q3 survey here