Manufacturer optimism dips in Q2

Respondents to the quarterly Manufacturers’ Outlook Survey listed attracting and retaining workers and trade uncertainties as their two biggest challenges.

   Optimism among manufacturers has dipped to the lowest level since the fourth quarter of 2016 amid trade uncertainties, according to the quarterly Manufacturers’ Outlook Survey released Friday by the National Association of Manufacturers.
   The second-quarter survey found 79.8% of the 689 respondents had a positive outlook about their own company, which was down nearly 10 percentage points from the first quarter and 15.3 percentage points from the second quarter of 2018. Companies with less than 50 employees were more optimistic than manufacturers with more than 500 employees — 85.2% to 76.1% respectively — which “points to the uncertainty facing business that rely more on international trade,” according to the survey.
   According to the survey, 56% of respondents said trade uncertainties were their companies’ primary current business challenge, which was second only to attracting and retaining a quality workforce (68.8%).  
   “Clearly, optimism is still strong among manufacturers, but you can’t overlook the fact that trade uncertainties are causing concern for manufacturers,” NAM chief economist Chad Moutrey said. “All things equal, I would expect these numbers to improve if we get the U.S.-Mexico-Canada Agreement across the finish line, strengthen our trading relationships by removing the threat of 232 auto tariffs and get a trade deal with China done.”
   Four-fifths of respondents said approval of the USMCA is important to their businesses. Mexico became the first of the three countries to approve the pact, and congressional Democrats during a House Ways and Means hearing on Wednesday said they will work in good faith with the Trump administration throughout the congressional consideration progress.
   The inability to attract and retain workers remained the top concern for the seventh straight survey. Unemployment has reached near 50-year lows and the labor market has more job openings than people looking for work, the survey said.
   “As manufacturers increasingly search for more workers to fuel their growth and production, it makes sense that 78.2% of manufacturing respondents said that a reformed immigration system that better suits the needs of employees was an effective way of addressing the ongoing workforce challenge,” the survey reads.
   Three-quarters of the respondents said America’s infrastructure is not sufficient to meet their competitive needs over the next 10 to 15 years, and 55.3% said the passage of a major infrastructure bill would positively impact their company’s plans and outlook.
   In February, NAM released its updated “Building to Win” infrastructure strategy for Congress and President Trump. The U.S. Chamber of Commerce along with a coalition of more than 40 businesses and labor groups sent a letter to congressional leaders and President Donald Trump on June 19 urging them to resume infrastructure discussions and to take legislative action this year.
   Other top challenges in the survey included rising health care and insurance costs (55.6%) and increased costs of raw material (46.4%).