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Manufacturing Optimism Plummets; CAPEX Predictions Turn Negative

December 07, 2012, 07:33 AM
Filed Under: Manufacturing

According to the National Association of Manufacturers (NAM)/IndustryWeek Survey of Manufacturers released on December 6, 2012, the number of manufacturers with an optimistic outlook about the future of their companies has dropped by nearly 40 percent since the beginning of 2012. The survey finds that the recent slowdown in manufacturing activity, uncertainty caused by the fiscal cliff and the poor business climate are having significant negative effects on businesses throughout the United States.

  • Only 51.8 percent of manufacturers are either somewhat or very positive about their company’s outlook today, versus 88.7 percent who held this optimistic view in the first quarter of this year. Manufacturers with a “somewhat negative” opinion nearly tripled in the past six months to almost 39 percent.  
  • Expectations for sales over the next year also dropped, from 4.7 percent in March to just 1.0 percent today.
  • Manufacturers’ predictions about future capital spending and hiring turned negative for the first time since the fourth quarter of 2009.
  • The prospect of higher taxes and reduced spending (e.g., the fiscal cliff) caused 62.9 percent of manufacturers to reduce their business outlook for 2013. Moreover, 42.6 percent either reduced or slowed down their business investment, and 36.2 percent either reduced their employment or stopped hiring.
  • Almost 89 percent of manufacturers want the top priority of the second Obama term and the 113th Congress to be a long-term budget deal that tackles the deficit and debt. Slowing the growth of entitlements (82.1 percent) and averting the fiscal cliff (75.5 percent) were also high on the list. Many of the other issues of concern deal with ensuring overall global competitiveness and the business climate.

“As negotiations to avert the fiscal cliff drag on, Washington policymakers cannot continue to ignore the dangerous warning signs from the manufacturing sector,” said NAM President and CEO Jay Timmons. “Without action to address the fiscal issues facing us, manufacturers are at serious risk. The message from manufacturers couldn’t be clearer and their concerns more justified--they are worried for their businesses, their employees and our nation’s future. Washington must listen to their call. Restoring certainty and implementing pro-growth business policies is critically important, not only for the health of manufacturing in the United States, but for the health of our entire economy.”

The NAM/IndustryWeek Survey of Manufacturers was conducted among 440 manufacturers in a variety of industries and of various sizes. Click here for the full survey results.

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