Manufacturer optimism hits lowest levels since 2020
Manufacturers are less optimistic about their company’s outlook than last quarter, according to a new survey from the National Association of Manufacturers.
Why it matters: President Biden has made restoring manufacturing jobs a priority for his presidency. But he needs companies to feel confident about the overall business environment to invest in new factories and new employees.
State of play: Some 67% of manufacturers reported feeling positive about their own company’s outlook in the second quarter, according to a survey of more than 300 small, medium and large manufacturers.
- That’s a drop from 74.7% in Q1, making it the lowest reading since Q3 2020, and before the pandemic, the lowest since Q3 2019.
- Companies are concerned about regulation, with some 63% of manufacturers reporting that they would purchase more capital equipment if the regulatory burden decreases.
- Workforce challenges remain a top concern. More than 74% of manufacturers cited the inability to attract and retain employees as their top primary challenge.
- Their next worry: A weaker domestic economy (55.7%).
The big picture: The downward trend from the manufacturers survey is consistent with a report out today from the Business Roundtable, which gauges its CEO’s economic expectations.
- The CEO economic index ticked down to 76, from 79 last quarter.
- That’s still well above 50 (the line between expansion and contraction) but below its long-term average of 84.
- Just 33% of CEOs envision their headcount increasing, compared to 41% last quarter.
The bottom line: Manufacturers aren't predicting a recession, but they do feel less confident about the future than three months ago.
- They are looking to Congress to pass permitting reform and the Biden administration to lessen the regulatory burden they feel.