2018 Q2 Manufacturers' Outlook Survey: Positive Sentiment Before Trade War Begins

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Manufacturers in the United States continue to be on edge as trade tensions materialize into established policies. The National Association of Manufacturers (NAM) is one organization that represents the industry and publishes data reflecting the outlook of manufacturing companies. In NAM’s “2018 Second Quarter Manufacturers' Outlook Survey,” the most recent industry outlook is provided for the second quarter of 2018. The survey was conducted from May 22nd to June 5th and included 568 participants.



Based on an overall outlook, NAM determined that 95.1 percent of respondents saw a positive outlook for their companies in the next 12 months. Included in this statistic were 97.9 percent of large manufacturers having a positive outlook and 89.5 percent of small manufacturers having a positive outlook. Interestingly, this disparity was reversed in the first quarter where 93.8 percent of large manufacturers had a positive outlook and 94.5 percent of small manufacturers had a positive outlook. The trend suggests that small businesses have more trouble adjusting to more uncertainty as they might have smaller orders and shorter contract periods.



Manufacturers continue to see robust growth rates over the next 12 months. On average, the companies see sales growing 5.7 percent, slightly lower than the previous month. The respondents saw an increase in their expectations of capital investments, employment, and exports, all edging up from the previous month. Higher inflation also showed itself through higher expected product prices and wages. With the survey being so early in the second quarter, companies might not have fully realized the effect tariffs could have so that negative sentiment could be inaccurately represented.



Besides potential trade concerns, which is an issue that might be represented in the next edition of the survey, manufacturing companies saw “attracting and retaining a quality workforce” and “rising raw material costs for our products” as the two current business challenges. The top concern of finding a quality workforce has been at the top for three straight surveys suggesting a problem ingrained in the U.S. workforce. The exact reason for this trend is unknown, but one driving factor could be a constant reduction in the total workforce that reduces the variety of workers available as overall supply falls. However, curiously enough employment gains are still increasing.

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