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National Association of Manufacturers Survey: Slowing Growth Dampens Positive Outlook

The National Association of Manufacturers Fourth Quarter 2022 Outlook Survey showed growing concerns around inflation, supply chain disruptions and the workforce.
4 minute read
March 6, 2023

The number of manufacturing companies with a positive outlook for their company fell in the fourth quarter, according to the National Association of Manufacturers (NAM) Fourth Quarter 2022 Outlook Survey, while growth slowed across the board. Manufacturing companies nonetheless plan to continue capital investment while managing workforce challenges and the threat of recession.

The NAM survey, which was conducted in late November and early December 2022 among 337 respondents, showed growing concerns around inflation, supply chain disruption, and the workforce. Manufacturing activity is at post-pandemic lows, with a slight production decline (0.6%) in November, and growth of around 1.2 percent over the past 12 months.

Positive Outlook Remains

Respondents reported that growth is slowing across the board, as nearly 70 percent of respondents reported a positive outlook for their company, down from 76 percent in the Q3 2022, and the lowest since the third quarter of 2020. Notably, the outlook for medium-sized manufacturers fell to 71 percent from 78 percent in the Q3. Consistent with contracting activity in the sector, the NAM Manufacturing Outlook Index measured 45.8 in the fourth quarter, down from 50.3 in the third quarter.

Recession Fears Grow, but Investment Continues

In this survey, 62 percent of manufacturing leaders believed that the U.S. economy would slip officially into a recession in 2023. Despite this, plans remain to invest in:

Workforce and Supply Chain Challenges Persist

More than three-quarters of manufacturers reported that attracting and retaining quality workforce was a primary business challenge along with supply chain disruptions (66 percent), increased raw material costs (61 percent), transportation and logistics costs (50 percent), rising health care and insurance costs (48 percent), a weaker domestic economy (48 percent), and an unfavorable business climate (44 percent). On a brighter note, the average expected increase in raw material prices was only around 3 percent, the lowest since the Q3 2020.

Eleven percent of respondents reported that supply chain disruptions have already improved, and 60 percent report expecting some additional improvement in 2023.

Growth Predictions are Slowing

Manufacturers also reported their predicted growth rates for various areas of the sector over the next 12 months. Many predictions were down from the third quarter.

Legislative Priorities

Survey respondents reported what they saw as the priorities for the 118th Congress.

Nearly 90 percent of manufacturing leaders said their company would find it more difficult to expand their workforce, invest in new equipment or expand facilities if the tax burden on income from manufacturing activities increased.

Weaver has experience in helping manufacturers navigate complex challenges to provide meaningful insights. We can help with evaluating tax impacts of these issues, and can guide as consultants through strategic changes. Our audit teams understand the challenges manufacturers are facing and how those can impact their results.

For more information on how Weaver can help your business now, contact us.

Authored by Chris Boyd, CPA.