NAM 1Q Survey Shows Slightly Higher Outlook Amid Regulatory Concerns

The National Association of Manufacturers released the results of its 2024 first quarter Manufacturers Outlook Survey, which showed a modest improvement from respondents about business conditions and elevated concern regarding regulations from the Biden administration.

The survey polled approximately 300 manufacturers between Feb. 9-23.

Overall manufacturing sentiment from the survey edged up sequentially in 1Q, with 68.7% of respondents indicating they felt either somewhat or very positive about their company’s outlook, up from 66.2% in 4Q. It was the sixth straight reading below the survey’s historical average of 74.8% — averaging 66.8% over the past four surveys. Meanwhile, the NAM Manufacturing Outlook Index measured 45.8 in 1Q, up from 44.1 in 4Q.

Business Conditions

Here is how respondents overall indicated their expected 12-month growth rates for various business conditions in the 1Q outlook survey, and how it compared with the 4Q23 survey that closed Dec. 1, 2023:

• Sales: +2.2%, up from +1.5%
• Full-time employment: +1.0%, up from +0.6%
• Capital investments: +1.4%, up from +0.6%
• Prices of company’s products: +1.8%, up from +1.3%
• Inventories: -1.6% (down for the 7th straight quarter), up from -1.7%
• Production: +2.3%, up from +1.7%
• Employee Wages: +2.8%, down from +2.9%
• Exports: +0.2%, flat
• Raw material prices and other input costs: +2.4%, up from +1.8%
• Health insurance costs: +7.1%, down from +7.3%

Other notes from the 1Q24 NAM Manufacturing Outlook Survey:

65.2% of respondents cited the inability to attract and retain employees as their top primary challenge, followed by unfavorable business climate (58.9%) and rising health care and insurance costs (58.2%). Though still atop the list, the workforce challenge fell to its lowest reading since 4Q2020.

Regulatory Concerns

Asked about the difficulties presented by new regulations from various federal agencies rolled out in early 2024:

• 66.9% of respondents said the rules will take significant time to understand and comply with
• 65.5% said the rules will be costly to implement
• 54.3% said the rules may undermine day-to-day business operations
• 43.0% said finalizing several rules in a short time period amplifies their impact and difficulty, and extends the time needed to comply
• 42.7% said the rules exceed the expected scope of agencies’ regulatory authority

Other 1Q survey findings on the regulatory front:

• Nearly 94% of respondents indicated that it is important for the federal tax code to help reduce manufacturers’ costs for conducting R&D, accessing capital via business loans and investing on capital equipment purchases — with 58% indicating that it’s very important
• 72.4% of respondents indicated the length and complexity of the current permitting reform process affects their investment decisions in various degrees, with 38.9% indicating they were extremely or moderately impacted

Find much more results from the 1Q survey and download the full resulting report from here.

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