NAM/Industry Week Survey for Q1 predicts higher sales, employment and investment

March 19, 2012

The manufacturing industry has grown over the past several months, and a resurgence in the sector was shown in the NAM/Industry Week Q4 Survey. This data has been supported by the most recent indicator, as the Q1 survey highlights increased optimism from manufacturers across the U.S., Industry Week reported.

Chad Moutray, chief economist for the National Association of Manufacturers (NAM), wrote in the news outlet about the revival of the sector, and the 3.4 percent growth in industrial production in the last year, along with 111,000 net new jobs.

According to the article, the first quarter survey reflects a continued optimism in the industry, as 88.7 percent of NAM members noted that they had a positive outlook – a rise from 80.2 percent in December and 65.4 percent in September.

"Given these responses, we are able to predict, using regression analysis, that industrial production in the manufacturing sector (NAICS) should be 95.5 in the third quarter of 2012," Moutray noted. "This suggests that industrial production would be 3.9 percent higher in the third quarter of 2012 than in the same time period in 2011."

The article noted that positive information was seen throughout the survey, as almost 77 percent of the respondents expect their sales to rise in the next year, with the average increase projected to be 5.3 percent. Along with these rises, overall hiring and capital spending were estimated to grow by 2.2 percent and 4.1 percent, respectively.

According to Moutray, workers will be one of the main beneficiaries of the growth in the sector, as business strategy reflected an expected 1.8 percent rise in wages over the next 12 months. The small level of negativity shown in the survey concerned the lack of qualified workers that are available to fill positions.

The article noted that the U.S. economy has become less of a concern, and 73 percent of respondents noted a growing GDP for America would drive future growth.

Reuters reported that jobless claims in the U.S. dropped to a four-year low and business sentiment in the country remained positive.

"This suggests that the recovery is firmly on track," Scott Brown, chief economist at Raymond James in St. Petersburg, Florida, told the news source.

The Federal Reserve, according to Reuters, noted that it expects the jobless rate to decline further and the manufacturing sector could contribute to this drop.