The National Association of Manufacturers (NAM) released its second quarter Manufacturers’ Outlook Survey, conducted May 17 to 31, which shows significant concerns around recession, inflation, hiring and China competition legislation.
“Through multiple crises, manufacturers have proven remarkably resilient, but there’s no mistaking there are darker clouds on the horizon,” NAM president and CEO Jay Timmons said. “A majority of our surveyed members believe inflationary pressures are making a recession more likely within the next year.”
In the survey, 59.3 percent of manufacturing leaders believed inflationary pressures would make a recession more likely in the next 12 months. Increased raw material costs topped the list of primary business challenges in the second quarter, cited by 90.1 percent of respondents.
About 75 percent of manufacturers felt inflationary pressures were worse today than six months ago, with 53.7 percent noting that higher prices were making it harder to compete and remain profitable. The top sources of inflation were increased raw material prices at 97.2 percent, freight and transportation costs at 83.9 percent, wages and salaries (79.5 percent) and energy costs (55.9 percent), with 49.4 percent also citing a shortage of available workers.
“Russia’s war on Ukraine has undeniably exacerbated higher energy and food costs,” Timmons said. “This, along with record deficit spending since the pandemic began, has created the highest inflation since 1981. But actions here at home can help ease these pressures, including first and foremost harnessing every energy resource available to us domestically and quickly, and refraining from imposing new taxes on manufacturers or families.”
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“It also means acting on manufacturers’ solutions to our supply chain challenges and passing the China competition bill, or bipartisan Innovation Act,” he added. “Though it won’t solve every issue, this will give us many of the tools needed to ramp up domestic manufacturing and strengthen our supply chains. That’s why 88 percent of manufacturers in our survey see it as an important piece of legislation, and Congress needs to move swiftly to get it to President Biden’s desk.”
When asked about what aspects of the China competition legislation were most important for supporting manufacturing activity, 70.9 percent of respondents cited addressing port congestion and competition issues in ocean shipping. Despite ongoing economic headwinds, manufacturers remain largely optimistic, with 82.6 percent maintaining a positive outlook for their company.
NAM 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 12.7 million people, contributes $2.71 trillion to the U.S. economy annually and accounts for 58 percent of private-sector research and development.