Manufacturing Optimism Drops in New Survey

National manufacturing sector optimism dropped to its lowest level since the height of the COVID-19 pandemic according to a new survey from the National Association of Manufacturers.

NAM’s Manufacturers’ Outlook Survey showed that 55.4% of respondents reported a positive outlook for their companies in the second quarter.

That represents a nearly 15% drop from the first quarter and the lowest level since the second quarter of 2020.

“These numbers are yet another indicator that manufacturers need increased policy certainty,” said NAM president and CEO Jay Timmons.

Trade Uncertainty

Over three-quarters of those surveyed (77%) said trade uncertainty was their top concern, followed by raw material costs (66.1%).

It’s the second consecutive quarter that trade uncertainty topped the list of concerns.

The survey noted that increased tariffs are already making an impact on manufacturers’ bottom lines.

77% of manufacturers said trade uncertainty was their top concern

Eighty-nine percent said the cost of doing business has increased due to tariffs.

The Trump administration’s tariff policies—now being challenged in federal courts—were expected to hike the cost of goods imported into Connecticut by an estimated $3.16 billion.

Respondents said other impacts included dampened growth outlooks, delayed or canceled investments, and paused hiring, reduced workforce, or decreased worker hours.

‘Strategic Approach’

The survey also highlighted the impact on exports, with nearly 62% of manufacturers responding that export opportunities have been impacted­.

For the first time since the second quarter of 2020, manufacturers expect sales to decline over the next 12 months.

Canada, China, and Mexico are the destinations most impacted by U.S. trade policies and retaliatory tariffs.

“Manufacturers need a strategic approach to trade policy.”

NAM’s Jay Timmons

“This quarter’s results also show that manufacturers need a strategic approach to trade policy that allows our industry to reduce costs and access the inputs we need to make things in America,” said Timmons.

Eighty-five percent of surveyed manufacturers said Congress should preserve pro-growth tax policies in response to trade uncertainty.

“Congress must act urgently to preserve tax reform and empower manufacturers to make the long-term investments that drive the American economy,” said Timmons.

“The stakes are high: preserving tax reform will prevent the loss of six million jobs and avoid a $1 trillion hit to the economy.”