NAM: Workforce, Business Climate Remain Challenges In Fourth Quarter In its Monday economic outlook survey, NAM reports, “Manufacturing sentiment inched up in Q4 but remained not far from the post-pandemic low, with 66.2 percent of respondents in the most recent NAM Manufacturers’ Outlook Survey feeling either somewhat or very positive about their company’s outlook, edging up from 65.1 per- cent in the third quarter. “It was the fifth straight reading below the historical av- erage (74.8 percent), averaging 66.1 percent over the past three surveys. Interestingly, optimism in the outlook rose solidly among large manufacturers, but continued to re- main challenged for small and medium-sized firms. “Fewer respondents expect a recession in 2024 than three months ago, but nearly 41 percent felt uncertain. Just more than 34 percent of manufacturers believed the U.S. economy would experience a recession in calendar year 2024. This is down from 56.8 percent and 42.2 per- cent who said they expected a recession over the next 12 months in Q2 and Q3, respectively. With that said, just one-quarter of those completing the survey felt the econ- omy would avoid a recession, with 40.7 percent uncertain. “Workforce challenges continue to dominate. More than 71 percent of manufacturers cited the inability to at- tract and retain employees as their top primary challenge,
followed by a weaker domestic economy (63.7 percent), an unfavorable business climate (61.1 percent) and rising health care and insurance costs (59.8 percent). Concern about an unfavorable business climate was the highest in seven years (Q4 2016). In addition, inflation (38.5 percent) and supply chain (32.1 percent) concerns — both of which dominated in 2022 — have continued to moderate. “Eighty-nine percent of respondents said that high- er tax burdens on manufacturing activities would make it more difficult to expand their workforce, invest in new equipment or expand facilities. “Political dysfunction is a major concern for manufac- turers. When asked about major trends of concern, nearly 8 out of 10 respondents (77.6 percent) listed political dys- function as a major issue. Geopolitical turmoil (67.7 per- cent), economic recession (66.8 percent) and rising inter- est rates and the U.S. dollar (61.2 percent) followed closely as top concerns. In response to these trends, manufac- turers have been de-risking their supply chains. Eighty-six percent of respondents confirmed their companies have been working to adjust their supply chains to limit poten- tial risks. “International sales and entering new markets are a key part of future growth strategies. More than 84 percent of respondents stated that growth in exports to foreign markets was important to their success with more than 52 percent suggesting foreign markets were somewhat or very important for their company.”
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January 29, 2024
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