The National Association of Manufacturers (NAM) has released the results of its Q1 2022 Manufacturers’ Outlook Survey, which shows demand for manufactured goods remains strong, but manufacturers have significant concerns about inflation, hiring and potential tax increases.
Below are some of the key findings from the NAM survey:
- 1% of respondents cited supply chain challenges as a primary business challenge in the first quarter; 85.7% cited increased raw material costs; and 79.0% cited the inability to attract and retain a quality workforce.
- 6% of respondents said their company would find it more difficult to expand their workforce, invest in new equipment or expand facilities if the tax burden on income from manufacturing activities increased.
- 4% had unfilled positions within their companies for which they were struggling to find qualified applicants.
The NAM survey was conducted Feb. 11-25 prior to the Russian invasion of Ukraine. Severe disruptions caused by the war and the resulting sanctions will add significant uncertainty in the global marketplace and likely exacerbating supply chain issues, energy costs and inflationary problems for manufacturers.
“The humanitarian crisis and economic disruptions of Russia’s war on Ukraine, as well as the resulting sanctions that manufacturers fully support, will exacerbate these supply chain challenges and could impact energy costs even more as we move into the second quarter,” NAM President and CEO Jay Timmons said after the Q1 survey results were released on March 17.
Although job growth last year rose at the best pace since 1994, and wage growth is now at a 40-year high, the survey shows workforce shortages are still a major challenge. Manufacturers have had around 800,000 job openings or more—a very elevated rate—for 10 straight months, NAM said.
Manufacturers surveyed said they expect full-time employment to rise 3.7% over the next 12 months, just shy of the record set in September (3.8%). With that in mind, respondents also anticipate employee wages rising over the next year at 3.9% on average.
In addition to supply chain issues, increased raw material costs, and the inability to attract and retain a quality workforce, other challenges identified by manufacturers included rising transportation and logistics costs (72.7%) and rising health care and insurance costs (48.6%).
In a special question, 92.9% of respondents said that had to increase prices in the past six months. Companies that did so cited these factors: increased raw material costs (97.8%), higher wages and salaries (80.4%), increased freight and transportation costs (80.1%), increased health care and other benefit costs (47.8%) and higher energy costs (44.2%), among others.
With Congress now considering legislation that would increase taxes on income from manufacturing activities, 88.6% of respondents said their company would find it more difficult to expand their workforce, invest in new equipment, or expand facilities if the tax burden increased.
To read the entire survey results, go here.