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National Association of Manufacturers Third Quarter 2023 Survey: Concerns About Tax Burdens and Regulations as Positive Outlook Drops

The NAM Q3 2023 survey indicates that positive outlooks are at post-pandemic lows, or the lowest in seven years if the pandemic were excluded.
3 minute read
October 11, 2023

The number of manufacturing companies with a positive outlook for their company fell in the third quarter, according to the National Association of Manufacturers (NAM) Third Quarter 2023 Outlook Survey. The survey indicates that positive outlooks are at post-pandemic lows, or the lowest in seven years if the pandemic were excluded. Fewer survey respondents expect a recession in the next year compared to respondents in previous 2023 surveys, suggesting some positive sentiments about the economy’s future. Workforce challenges continue to drive the conversation, along with sentiments of federal regulation creating a less favorable business climate. The upcoming 2024 presidential election is also a key area of uncertainty, with nearly 80 percent of respondents reporting that they are following “somewhat closely” or “very closely.”

Taxation and Regulatory Concerns

Nearly 90 percent of respondents reported that increased tax burdens on manufacturing activities would make it more difficult to expand their workforce, invest in new equipment, or expand facilities. Additionally, concern about federal regulations is a common theme among respondents. Over 70 percent indicated they would purchase more capital equipment if the regulatory burden on manufacturers decreased, with nearly 50 percent reporting they would hire more workers and increase employee compensation. For small businesses, over 70 percent of small manufacturers reported they would hire more employees or increase compensation.

Recession Fears Ebb vs. Q2 2023

In the Q2 survey, nearly 60 percent of manufacturing leaders believed that the U.S. economy would slip officially into a recession in 2023. In the Q3 survey, that reduced by approximately 20 percent, where 42 percent report an expected recession within 12 months. Despite this, plans remain to invest in:

Organized Labor Disputes, Contract Negotiations Garner Attention

Only 17 percent of respondents reported they were not concerned at all with organized labor negotiations, with over 50 percent reporting various levels of concern from “somewhat concerned” (25 percent) up to “extremely concerned” (11 percent). The concerns center around potential impact to manufacturers with interruptions to the supply chain as a result of these labor disputes.

Production, Employment and Capital Spending

Manufacturers reporting higher production eased from 37% to 31% from Q2 2023 to Q3 2023. Employment and capital spending are also easing up as compared to Q2 2023. Other key trends reported from manufacturers regarding predicted growth rates over the next twelve months include:

The Q3 NAM survey was conducted in August 2023 among 323 respondents.

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Authored by Chris Boyd, CPA

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