Manufacturing Sentiment Rebounds in Q4 of 2024

The National Association of Manufacturers (NAM) has released its Q4 2024 Manufacturers’ Outlook Survey, offering a comprehensive look into the current state of the manufacturing sector. Conducted between November 15 and December 4, the survey captures insights from industry executives at a pivotal moment for manufacturing.

According to the survey, optimism among manufacturers has surged, likely due in part to post-election sentiments, with 70.9% of respondents expressing a positive outlook for their companies. This marks a significant rise from the 62.9% reported in the previous quarter, bringing the four-quarter average to 68.6%. Despite this upswing, manufacturers continue to navigate a landscape full of challenges.

Rising Costs and Workforce Dynamics

Concern over health care and insurance costs has trended upward since 2023 and emerged as the foremost concern for manufacturers, with 63.2% of respondents identifying these expenses as a primary challenge. This issue has overtaken concerns about a weaker domestic economy, which was the leading worry in Q3. Meanwhile, the challenge of attracting and retaining a quality workforce, while still a significant concern representing 55.8% of respondents, has slipped to the 4^th place priority after being the top concern for several years. More than 70% of manufacturers have less than 5% of jobs unfilled as reported in Q4.

Trade Uncertainty for Large Manufacturers

Trade uncertainty has become a critical issue, particularly for larger manufacturers (defined as entities with 500 or more employees). In Q4, 68.7% of large manufacturers cited trade-related challenges as a major concern, a notable increase from the previous quarter. This is a common sentiment, including concerns over possible tariff policies in the new administration. For manufacturers of all sizes, trade uncertainty now ranks as the third greatest challenge, with concern levels rising sharply from 36.8% in Q3 to 56.1% in Q4.

Tax Policy and Regulatory Challenges

Manufacturers are urging Congress to address scheduled tax increases that could impact the sector’s growth and competitiveness. With key tax provisions set to expire in 2025, nearly 80% of respondents stressed the importance of legislative action to prevent these increases. The potential expiration of provisions, such as immediate R&D expensing and the 20% pass-through deduction, poses significant challenges for the industry.

In addition, reducing the regulatory burden remains a top priority for manufacturers. More than 99% of respondents emphasized the need for the new administration to streamline regulations, with 65.7% viewing this as extremely important. The cost of compliance with federal regulations continues to weigh heavily on the industry, estimated to amount to roughly $350 billion annually.

Energy Strategy and Permitting Reforms

Manufacturers overwhelmingly support an all-of-the-above energy strategy, with 93.5% of respondents advocating for investment in diverse energy sources. Furthermore, over two-thirds of manufacturers call for reforms to streamline federal permitting processes, which would facilitate quicker expansion and construction of facilities in the U.S.

As the manufacturing sector looks to the future, these survey results underscore the critical need for strategic policy interventions to support industry growth and competitiveness. For more insights and assistance in navigating these challenges, Weaver’s professionals are ready to provide meaningful and strategic guidance. Contact us today.

Authored by Chris Boyd, CPA

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