Manufacturing is the engine of U.S. economic growth. That’s why, when the Federal Reserve Board hosted a virtual Fed Listens event to discuss the economic recovery from the COVID-19 pandemic, it asked NAM Chief Economist Chad Moutray to share his perspective.
In his remarks, Moutray gave an overview of activity in the manufacturing sector and laid out his expectations for the road ahead. Here are some of the highlights.
A positive outlook: “Manufacturers are experiencing very strong demand as the U.S. and global economy recovers from the steep declines in activity seen last year at the beginning of COVID-19,” said Moutray. “Indeed, the most recent NAM Manufacturers’ Outlook Survey found that 87.5% of respondents were positive about their company’s outlook, which—while down from the three-year high seen in June—remained a healthy figure.”
Concerns on the horizon: “At the same time, manufacturing leaders cited rising raw material costs as their top concern for the third straight quarter, followed closely by challenges with attracting and retaining enough workers, with supply chain disruptions, and with logistics and transportation issues,” said Moutray. “Interestingly, 81.5% of those completing the survey said that workforce shortages were the biggest downside risk to their economic forecast, closely followed by supply chain disruptions, increased cost pressures and the continued spread of COVID-19, including the delta variant.”
Supply chain struggles: “While manufacturing growth remains solid, supply chain bottlenecks are significant, holding back even stronger expansions in the sector,” said Moutray. “Manufacturers continue to cite the backlog of cargo at the ports, the shortage of truck drivers and soaring shipping costs as significant impediments. In a just-in-time production environment, this poses a serious challenge to production and capacity—and the shortage of workers is not helping either.”
A look ahead: “These supply chain and logistics issues are likely to extend into at least the first half of 2022, at least based on my conversations with manufacturing executives,” said Moutray. “While pricing pressures are likely to stabilize as we move into 2022—assisted by a more-favorable base comparison—it is also clear that some costs will remain elevated relative to pre-pandemic levels, and core inflation might run hotter than we had become accustomed to.”
Dive Deeper: Read more about the economic outlook in the NAM’s 2021 3rd Quarter Manufacturers’ Outlook Survey.
Washington, D.C. – Ahead of the midterm elections, the National Association of Manufacturers released its policy roadmap, “Competing to Win,” a comprehensive blueprint featuring immediate solutions for bolstering manufacturers’ competitiveness. It is also a roadmap for policymakers on the laws and regulations needed to strengthen the manufacturing industry in the months and years ahead.
With the country facing rising prices, snarled supply chains and geopolitical turmoil, manufacturers are outlining an actionable competitiveness agenda that Americans across the political spectrum can support. “Competing to Win” includes the policies manufacturers in America will need in place to continue driving the country forward.
“‘Competing to Win’ offers a path for bringing our country together around policies, shared values and a unified purpose,” said NAM President and CEO Jay Timmons. “The NAM is putting forward a plan filled with ideas that policymakers could pursue immediately, including solutions to urgent problems, such as energy security, immigration reform, supply chain disruptions, the ongoing workforce shortage and more. Manufacturers have shown incredible resilience through difficult times, employing more workers now than before the pandemic, but continued resilience is not guaranteed without the policies that are critical to the state of manufacturing in America.”
The NAM and its members will leverage “Competing to Win” to shape policy debates ahead of the midterm elections, in the remainder of the 117th Congress and at the start of the 118th Congress—including in direct engagement with lawmakers, for grassroots activity, across traditional and digital media and through events in key states and districts as we did following the initial rollout of the roadmap in 2016.
The document focuses on 12 areas of action, and all policies are rooted in the values that have made America exceptional and keep manufacturing strong: free enterprise, competitiveness, individual liberty and equal opportunity.
Learn more about how manufacturers are leading and about the industry’s competitiveness agenda at nam.org/competing-to-win.
The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs more than 12.8 million men and women, contributes $2.77 trillion to the U.S. economy annually and accounts for 58% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org