NAM economist optimistic about US manufacturing
NAM economist optimistic about US manufacturing
The nascent U.S. manufacturing renaissance is bringing new opportunities to workers and businesses in New Hampshire and across the country, but there are a series of challenges.
Chad Moutray, chief economist for the National Association of Manufacturers, led the Business & Industry Association’s recent 2024 Economic Forecast Webinar. BIA, the statewide chamber of commerce, has over 400 members in industries across the state. Among them are many manufacturers, staying true to our founding as the New Hampshire Manufacturers’ Association in 1913. BIA today is NAM’s New Hampshire affiliate, and we partnered with the N.H. Manufacturing Extensive Partnership to host the webinar.
Moutray, who is also director of Center for Manufacturing Research at the Manufacturing Institute, said two-thirds of NAM member companies in December had a positive outlook for 2024, a rate consistent throughout 2023. He said expected growth over the next 12 months includes a 1.5% increase in sales, 1.7% increase in production, exports up .2% and capital investments up .6%. While the numbers are not staggering, he stresses they are stable and none are negative. The numbers are positive when considering 34% of NAM members in December thought the United States would see a recession in 2024.
“I think that number will continue to drop as we move further into the year,” he said. “We’ve been trying to talk ourselves into a recession for the past two years. Hopefully, we can talk ourselves into a soft landing.”
There are other indicators of strength, including expanded production and a sharp increase in new orders in January, but manufacturers’ struggle to find workers remains a serious challenge. Moutray said he hears this from small, medium and large companies in every sector everywhere he goes. Count BIA members among them.
“The number one issue for five straight quarters and I wouldn’t be shocked if its six straight quarters is attracting and retaining a quality workforce, he said, adding, “I also hear it’s easier today than one month ago, three months ago, six months ago, a year ago, but the labor market is still tight.”
The number of well-paying manufacturing jobs is forecasted to surge. Moutray points to Goldman Sach estimates that an additional 250,000 workers will be needed to fill all jobs associated with our renaissance.
Last April’s 3.4% national unemployment rate was the lowest since 1969. While it rose to 3.7% in November, December and January, Moutray calls that essentially full employment. Here in New Hampshire, it was 2.5% in December. Moutray told us he expects the U.S. rate to approach 4% or slightly higher in 2024, but adds, “We’ve never had a recession with full employment before.”
There are currently 12.98 million manufacturing workers, the most since November 2008, and Moutray believes manufacturers will add at least 100,000 more this year. “By the time we get to the end of 2025, we’ll be 13.2 million at least,” he said.
Private manufacturing construction spending shot up from $70 billion in 2018 to $213 billion entering 2024. “This not just an all-time high but a whopper of a number. Up 60.7% year over year,” Moutray said.
He credits U.S. industrial policy with the bulk of investments resulting from the federal CHIPS and Science Act that is spurring semiconductor investments around the country. He also points to investments in electric vehicles, batteries and energy components prompted by the Inflation Reduction Act and to the reshoring of manufacturing jobs.
“A lot of this investment is shovels in the ground, but none of these factories are up and running yet. Every one has a help wanted sign attached to them,” Moutray said.
The U.S. House’s recent bipartisan passage of a $79 billion tax cut package that includes restoring full, immediate deductions for new equipment purchases and domestic R&D expenses will help offset some of today’s higher costs of construction and equipment. The package still requires Senate approval. BIA joined NAM and the U.S. Chamber in supporting the package this past December.
However, Moutray warns “a huge regulatory onslaught coming from Washington” is a threat to U.S. manufacturing. “There are more than 100 regulations that we’re following,” he said. And he adds that tax policies should be among top issues in November’s elections.
“Whoever wins the election will shape taxes for next decade because the 2017 tax cuts expire in 2025,” he said. “That will really be the conversation that we’re going to be having from a policy standpoint as you move through the end of this year into 2025.”
Moutray provided much more valuable information during the hour-long webinar. I encourage you to check it out. Click here to view the webinar.
Michael Skelton is president and CEO of the Business & Industry Association. Visit BIAofNH.com for more information.
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