NAM Reports Vibrant Manufacturing Sector
After plummeting sharply last year due to the COVID-19 pandemic and the global recession, manu- facturing activity has rebounded,with the sector being a bright spot in the economy in recent months, accord- ing to the new National Association of Manufacturers’ outlook survey for the first quarter of 2021. Manufacturing production is likely to exceed pre-pan- demic levels in the next couple months, and employ- ment in the sector has risen in all but one month since April 2020. Despite solid growth, there have also been significant supply chain disruptions in the marketplace as firms have struggled to keep up with that demand. In the most recent Institute for Supply Management report, the backlog of orders soared to the highest lev- el since April 2004, and raw material costs rose at the swiftest rate since May 2008. In addition, firms contin- ue to note workforce challenges, with manufacturing job openings elevated despite a dramatically altered labor market over the past year. With that as context, the Manufacturers’Outlook Sur- vey for the first quarter of 2021 was conducted from February 19 to March 5, and 87.6 percent of respon- dents felt either somewhat or very positive about their company outlook. It was the third straight quarterly increase in optimism in the survey, with the outlook bouncing back from the 33.9 percent reading in the second quarter of 2020,which was the worst since the Great Recession. More importantly, this suggests that manufacturers had the strongest outlook in two years, since the first quarter of 2019. The NAM Manufacturing Outlook Index measured 58.7 in the first quarter, up from 49.8 in the fourth quarter. This is consistent with the current outlook that was well above the historical average, which was 74.5 percent. For the past three reports,manufacturers were asked about production, employment and capital spending in the current quarter relative to the previous one.This information can be expressed as purchasing managers’ indices. Respondents were asked when they expect reve- nues to return to pre-pandemic levels. Nearly 33 per- cent said that their revenues had recovered by the end of 2020.An additional 6.3 percent reported their reve- nues will return to pre-pandemic levels by the end of the first quarter of 2021 (the current quarter). Overall, 67.6 percent of manufacturers completing this survey anticipate that their revenues will be back to pre-pandemic levels by the end of 2021, with 85.7 percent saying the same thing by the end of 2022. Rising raw material costs topped the list of primary
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6 March 15, 2021 Flexo Market News
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