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Manufacturer Confidence Drops

Manufacturers have faced supply-chain challenges and workforce shortages.

Manufacturers have faced supply-chain challenges and workforce shortages.

A dip in manufacturer confidence reflects persistent supply-chain constraints and significant labor shortages, according to a recent survey, as the Federal Reserve announced a fifth interest rate hike in six months.

The National Association of Manufacturers survey of 14,000 members showed 78 percent view supply-chain disruptions as a “primary business challenge,” and fewer than 11 percent see relief ahead.

Despite the challenges, a majority are hopeful about the future, the survey showed.

“The reality is, three-quarters of manufacturers are positive about their own company’s outlook, so that’s a great, positive story,” said NAM president Chad Moutray. “Yet 63 percent of respondents expect to see a recession this year or next, so you have that kind of interesting juxtaposition of viewpoints there.”

Manufacturers in the boating industry are experiencing an unusual phenomenon, according to Correct Craft president and CEO Bill Yeargin.

“Industry retail sales are down about 20 percent across the board this year, but manufacturers still have strong order books,” Yeargin told Trade Only Today. “This is a result of low dealer inventories and boats having retail buyers before they are built.”

The retail sales drop will eventually work its way back to manufacturers, Yeargin predicts.

“We are working hard to be nimble and continuing building boats our dealers want, while also keeping a close eye on the future,” he said. “We have developed a proprietary prognostic tool that helps us look forward and project future production.”

On Wednesday, the Federal Reserve raised interest rates for the fifth time since March in an effort to curb inflation. Rising rates have slowed manufacturing orders. The Institute for Supply Management’s new orders index rose to 51.3 percent in August from 48 percent in July but reflects lower demand from August 2021, when new orders reached 65.5 percent.

Moutray said some manufacturers will start scaling back hiring and investment in light of the survey results.

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