2018 on Pace for Record-High Year of Manufacturer Optimism

On Oct 5, 2018

On the heels of yet another positive employment report showing 18,000 manufacturing jobs were created in Sept., the National Association of Manufacturers (NAM) released the results of the Manufacturers’ Outlook Survey for the third quarter of 2018. According to the results, optimism among manufacturers remains exceedingly high (92.5 percent) following enactment of tax and regulatory reform and is on pace for the highest yearly reading in the survey’s 20-year history. In addition, the four-quarter average from Q4 2017 through Q3 2018 rose to 93.9 percent—making it the highest one-year average on record.

As thousands of manufacturers host Manufacturing Day events across the country, which President Trump marked with a presidential proclamation, the survey also shows that despite the sustained high level of optimism, the lack of enough skilled workers continues to pose significant challenges for manufacturers’ ability to grow their business. According to the latest government data, there are more than 500,000 open manufacturing jobs in the United States. The inability to attract a quality workforce has forced more than one in four manufacturers surveyed to turn down new business opportunities, while one-third noted that they held off on plans to hire more workers due to workforce constraints. Nearly half of manufacturers surveyed cited this workforce crisis as the number-one threat facing their business.

Highlights from the Q3 survey include the following:

• The vast majority of manufacturers (92.5 percent) in Q3 said they have a positive outlook for their businesses, putting manufacturers’ optimism for 2018 on track to be the highest annual average in the survey’s 20-year history.
• The four-quarter rolling average inched up to a record-high 93.9 percent.
• Optimism among small manufacturers increased from 89.5 percent in Q2 to 91.3 percent in Q3.
• Projected wage growth remained at the fastest pace in 17 years.
• Attracting and retaining a quality workforce remained the top concern among manufacturers (73.2 percent).
• The inability to attract a quality workforce has forced more than one in four manufacturers to turn down new business opportunities, while one-third noted that they held off on plans to hire more workers due to workforce constraints.

“Tax reform and regulatory relief have spurred strong manufacturing growth, and manufacturers are now investing in our communities, hiring more Americans and raising wages and benefits,” said NAM President and CEO Jay Timmons. “Amid all this good news, it is no surprise that manufacturers in 2018 are more optimistic than they have ever been in the history of our survey. Still, with the workforce crisis being manufacturers’ most widely cited challenge, the NAM and our Manufacturing Institute are tackling the issue head on—launching the Heroes MAKE America training program on military bases to equip soldiers with the skills to join the manufacturing workforce, expanding vocational training programs in local communities and elevating the examples of successful company-led upskilling programs. Over the long term, we have to focus on the attraction of new talent and inspire the next generation, just as we are on Manufacturing Day.”

The NAM will deliver pocket cards with the new survey results to every member of the House and Senate.

Conducted by NAM Chief Economist Chad Moutray, the Manufacturers’ Outlook Survey has surveyed the association’s membership of 14,000 large and small manufacturers on a quarterly basis for the past 20 years to gain insight into their economic outlook, hiring and investment decisions and business concerns.

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