Businesses are also noting improved conditions. Earlier today, the National Federation of Independent Business observed increased optimism among small business owners, for instance. This mirrors similar rises in confidence among consumers.
In the manufacturing sector, the latest NAM/IndustryWeek Survey of Manufacturers found that 80 percent of the respondents are either somewhat or very positive about their business outlook. This is up from the 65 percent who said likewise in the September survey. It might be a surprise to some that 80 percent of manufacturers are positive, especially given the economic wariness that pervades the news. However, other surveys have been equally positive about future conditions, even when the current environment was less than ideal, including those from regional Federal Reserve Banks.
According to the NAM/IndustryWeek data, manufacturing sales are expected to rise by 4.4 percent over the next 12 months, with hiring and capital spending up 1.8 percent and 2.8 percent, respectively. Wages should go up 1.4 percent on average. Each of these expected growth rates is an upgrade from what was observed just three months ago. Even with these numbers, the economy remains the number one business challenge, according to the respondents, followed by the tax and regulatory environment, rising energy and raw material prices and the ability to attract and retain a quality workforce.
International trade continues to be a major opportunity for manufacturers, and over 44 percent expect to export more products in 2012. Twenty percent anticipate export growth of more than 5 percent. Of those companies anticipating higher exports, one-third are “very positive” in their business outlook, a much higher proportion than predicting the same or lower levels of exports. Moreover, 15 percent of the NAM members taking this survey said that increased international sales are a primary driver of their future growth.
The Survey of Manufacturers has been conducted quarterly since the fourth quarter of 1997. Overall, these numbers suggest that manufacturing should experience modest growth in industrial production moving into 2012, with respondents cautiously optimistic about the next year.
Chad Moutray is chief economist, National Association of Manufacturers.