NAM: Monday Economic Report
In the latest NAM Manufacturers’ Outlook Survey, 87.6% of respondents said they feel either somewhat or very positive about their company’s outlook, the highest level in two years. The outlook bounced back from the 33.9% reading in the second quarter of 2020, which was the worst reading since the Great Recession. Medium and large manufacturers were more upbeat in their outlook than smaller firms.
Roughly two-thirds of manufacturers expect to return to pre-pandemic levels of revenue by the end of 2021, with one-third saying that their revenues had recovered by the end of 2022.
Cited by 76.2% of respondents, rising raw material costs topped the list of primary business challenges in the first quarter. Although 65.8% of those completing the survey consider the inability to attract and retain talent as their top challenge, this issue dropped to second place.
Producer prices for final demand goods rose 1.4% in February, matching the record monthly pace seen in January. Excluding food and energy, producer prices for final demand goods increased 0.3% in February. Costs for transportation and warehousing rose 1.1% in February, extending the 1.3% gain seen in January.
Over the past 12 months, producer prices for final demand goods and services jumped from 1.7% year-over-year in January to 2.8% in February, the biggest increase since October 2018. Likewise, core producer prices have risen 2.2% since February 2020, up from 1.9% in January (seasonally adjusted) and the fastest pace since May 2019.
While consumer prices rose 0.4% in February, the fastest monthly gain in six months, pricing pressures at the consumer level have stabilized in recent months. Core inflation increased 1.3% year-over-year in February, down from 1.4% in the prior report. It will be interesting to see how this will impact consumer prices moving forward, at least in the short-term, with raw material costs rising more sharply.
The January survey reported 515,000 manufacturing job openings. Over the past six months, postings in the sector have averaged more than 505,000 each month, including October’s reading, which hit a record high at 545,000. These data offer an encouraging sign that manufacturers are confident enough in the economic outlook for their businesses to post new jobs.
In the larger economy, nonfarm business job openings increased to 6,917,000 in January, a 12-month high and the best reading since the COVID-19 pandemic began. January’s postings translate to 1.46 unemployed workers for every one job opening in the U.S. economy.
Consumer confidence rose to a 12-month high, according to the University of Michigan and Thomson Reuters, buoyed by increased vaccinations and a stronger economic outlook.