Manufacturing Optimism Declines Due to Increased Uncertainty

Washington, D.C., 06/29/12 -  Today’s release of the National Association of Manufacturers/IndustryWeek Survey of Manufacturers for the second quarter supports what we’ve seen from recent economic indicators. Manufacturing has been slowing over the past few months. Manufacturers are concerned about tax, energy and regulatory policies coming from Washington. For the second quarter in a row, a majority of respondents identified the unfavorable business climate as their primary challenge, up from 62.2 percent to 64 percent in the first quarter.

The survey results showed that 46.4 percent of respondents identified rising energy and raw material costs as a top challenge, indicating the importance of a real “all of the above” energy strategy. Smaller manufacturers are also less positive than larger manufacturers, anticipating sales growth of 2.75 percent compared to 4.8 percent and 4.4 percent sales growth anticipated by medium-sized and larger firms, respectively. There was a 5 percent decrease in the number of respondents who are somewhat or very positive about their company’s outlook, dropping from 88 percent to 83 percent in the first quarter.

 “With so many indicators reflecting a weakening in the manufacturing sector, it has become very clear that manufacturers are growing more cautious as they continue to face significant headwinds,” said NAM Chief Economist Chad Moutray. “Aggressive regulations, uncertainty in the tax code, high energy costs and global competitiveness are just a few of the issues Washington needs to address to get manufacturing growing strongly again.”

Several recent economic indicators have shown the pace of manufacturing activity slow in recent months, including those from some of the regional Federal Reserve Banks and the Institute for Supply Management’s survey. The comments reflected in this quarter’s survey echo this trend as manufacturers were slightly less confident in their company’s outlook, impacting their expectations for sales, employment and investment. The NAM has laid out policies to keep manufacturing competitive in A Manufacturing Renaissance: Four Goals for Economic Growth.

The NAM/IndustryWeek Survey of Manufacturers was conducted among 425 manufacturers in a variety of industries and of various sizes. Click here for the full survey results.