Manufacturer optimism hits lowest levels since 2020

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.