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AICC, through its membership in the Council of Manufacturing Associations, is pleased to present the "Monday Economic Report” from the NATIONAL ASSOCIATION OF MANUFACTURERS (NAM).
NAM Economic Toplines:
In the second quarter NAM Manufacturers’ Outlook Survey, 90.1% of respondents felt either somewhat or very positive about their company outlook, rising for the fourth straight quarter and the best reading in nearly three years. Respondents are predicting the highest levels of production, sales and job growth in Outlook Survey history. Three-quarters of manufacturers expect revenues will be back to pre-pandemic levels by the end of 2021.
Rising raw material costs once again topped the list of primary business challenges in the second quarter, with record paces expected for input costs and product prices over the next 12 months. In addition to rising costs, other top worries in the second quarter include the inability to attract and retain a quality workforce, supply chain challenges, transportation and logistics costs and rising health care and insurance costs.
The PCE deflator rose 0.4% in May, and since February 2020, the PCE deflator has risen 3.3%, with core inflation up 3.1% over the past 15 months.
The IHS Markit Flash U.S. Manufacturing PMI expanded at a record pace, buoyed by stronger growth in output, future output and employment despite severe supply chain challenges. Raw material costs and output prices soared once again at all-time-high rates.
Manufacturing in the Kansas City and RichmondFederal Reserve Bank’s district also continued to expand rapidly, with a strong outlook despite lingering supply chain and workforce challenges and elevated costs.
New orders for durable goods rose 2.3% in May and have jumped 9.7% since February 2020, or 16.3% over the past 15 months with transportation equipment excluded. Similarly, core capital goods orders have soared 15.9% from pre-pandemic levels, with shipments rising to a new record in the latest data.
After soaring by a record-breaking 20.9% in March, fueled by stimulus checks to many Americans, personal income decreased 13.1% and 2.0% in April and May, respectively. Even with those pullbacks, personal income has jumped 5.7% year to date.
In the manufacturing sector, total wages and salaries have risen 3.4% over the past five months, with 5.0% growth since February 2020.
Personal spending was flat in May but has soared 5.3% over the past 15 months. The saving rate remained elevated at 12.4% in May.
The U.S. economy grew 6.4% at the annual rate in the first quarter. Real GDP remains just 0.9% shy of the pre-pandemic levels seen at the end of 2019, and the U.S. economy should return to that pace in the current (second) quarter.
Value-added output in the manufacturing sector rose to $2.444 trillion in the first quarter, an all-time high, including records for durable and nondurable goods. Real manufacturing value-added output, expressed in chained 2012 dollars, also increased to a record level. Manufacturing accounted for 11.1% of real GDP in the first quarter.
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