NAM’s take on the economy: upbeat, cautious
The nation’s economy is only now getting back to where it was, five years after the end of the deepest recession in U.S. history.
And the outlook for the months ahead is cautiously optimistic.
Those are the conclusions from this week’s quarterly summary from the National Association of Manufacturers.
Dr. Chad Moutray, NAM Chief Economist, pointed out that Institute for Supply Management figures show that most manufacturers remain upbeat in their outlook, as demand and output numbers continue to show strength. Overall in the third quarter just completed, the institute’s figures show new orders and production values over 60 on the institute’s scale, which Moutray says is healthy.
Overall, Moutray expects manufacturing production numbers to grow by about 4 percent this year, a mark he describes as “a decent figure.”
And Moutray says other figures point to continued growth into the next calendar year, with 87 percent of businesses surveyed saying their outlook is positive. Expected sales, inventories and hiring figures are the highest they have been since 2012.
Businesses do have some concerns on the horizon. 77 percent worry about increased health care costs with many expecting health insurance premiums to grow by double digit percentages. 73 percent of businesses are worried about their taxes and the nation’s overall tax structure and 49 percent of businesses rate the inability to attract and retain a quality workforce as a concern.
Also, a cloud on the horizon is the economic growth figures of important trading partners. Manufacturing exports are at an all time high, but Moutray says they are not expanding at a healthy pace. Four of the top 10 export markets, Germany, Brazil, Hong Kong and South Korea, are experiencing contraction in their economies. In fact the entire Eurozone shows a low growth potential into the fourth quarter. And Moutray says he also has concerns for China which grew only 7.3 percent in the third quarter and is currently decelerating.
Overall, Moutray says it has taken the U.S. economy 70 months for the economy to get back to where it was before the last recession…and industrial production and non-farm payrolls are still struggling to get back to pre recessionary levels. Manufacturing employment is 11 percent below where it was before the recession.
But, manufacturing hiring is picking up. According to the latest figures, the first seven months of the year saw hiring at 14,000 to 15,000 a month. In August, manufacturing actually lost 4,000 jobs. But figures picked back up to 4,000 gained in September, and Moutray says he expects growth when October figures come out.
Most of that growth is coming from the transportation equipment, fabricated metal products, machinery, and plastic and rubber sectors of manufacturing. And job openings are still rising well above job hiring numbers.