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NAM's 2nd Quarter Manufacturing Update

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This update was provided as a live interactive webcast to the members of the National Assoication of Manufacturer's Allied Organizations on Thursday, April 11, 2013.

This update was provided as a live interactive webcast to the members of the National Assoication of Manufacturer's Allied Organizations on Thursday, April 11, 2013.

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  • 1. THE MANUFACTURINGECONOMIC UPDATEDr. Chad MoutrayChief EconomistNational Association of ManufacturersUpdated April 8, 2013
  • 2. 69.5%73.9%74.5% 74.9%82.8%86.4%65.4%80.2%88.7%83.1%69.2%51.8%70.1%40%50%60%70%80%90%100%2010:1 2010:2 2010:3 2010:4 2011:1 2011:2 2011:3 2011:4 2012:1 2012:2 2012:3 2012:4 2013:1Manufacturing Business OutlookBy Quarter, 2010-2013Source: NAM/Industry Week Survey of ManufacturersNote: Percentage of respondents who characterized the current business outlook at somewhat or very positive. Percentagesare annual averages. Q4:2010 and Q1:2011 data are imputed from comparable data using a regression model.
  • 3. -2-101234562005 2006 2007 2008 2009 2010 2011 2012 Q1:12 Q2:12 Q3:12 Q4:12 Q1:13Expected Growth of ManufacturingSales, Investment, and EmploymentSales Investment EmploymentPercentSource: NAM/Industry Week Survey of ManufacturersNote: Expected growth rates are annual averages.Avg. 12-Mo. Growth Rates:Sales: ↑ 2.3%Investment: ↑ 0.9%Employment: ↑ 0.7%
  • 4. 7580859095100105Regressing NAM/IndustryWeek Datato Predict Future Industrial ProductionIndustrial Production Industrial Production (Predicted)Prediction for Industrial Production Q3:2013↑ 0.4 % Y-O-YOr, ↑ 1.5 % from Q1:2013
  • 5. Source: NAM/Industry Week Survey of ManufacturersNote: Respondents were able to check all that apply. Therefore, responses exceed 100 percent.4.7%27.9%37.3%41.1%49.9%67.7%72.1%74.0%Challenges with access to capital or other forms of financingWeaker global growth and slower export salesRising energy and raw material costs for our productsAttracting and retaining a quality workforceWeaker domestic economy and sales for our products to U.S.customersUnfavorable business climate (e.g., taxes, regulation)Uncertainties related to the political climate (e.g., debt/deficitdebate, pending budget cuts)Rising health care/insurance costsPrimary Current Business Challenges,First Quarter 2013
  • 6. -10%-8%-6%-4%-2%0%2%4%6%Real Gross Domestic Product(Chained 2005 Dollars)Real GDP Forecast:↑ 1.8% (2011)↑ 2.2% (2012)↑ 2.4% (2013)ForecastSource: Bureau of Economic Analysis, NAM calculations using Moody’s Analytics simulation model
  • 7. 2.3%2.2%2.6%2.4%0.1%2.5%1.3%4.1%2.0%1.3%3.1%0.4%0.4%0.7%0.5%1.1%0.5%-0.2%0.4%1.0%0.9%0.0%0.7%1.0%0.8%0.0%0.4%0.7%0.7%-0.1%-0.1%0.3%0.3%0.1%0.2%0.0%0.5%1.1%0.9%1.1%1.0%0.9%0.9%0.2%0.6%1.0%0.3%0.3%-1.0%0.0%1.0%2.0%3.0%4.0%5.0%Q1:2010 Q2:2010 Q3:2010 Q4:2010 Q1:2011 Q2:2011 Q3:2011 Q4:2011 Q1:2012 Q2:2012 Q3:2012 Q4:2012Percentage Growth in Real GDP andContributions to Real GDP of Goods and ServicesReal GDP Durable Goods Nondurable Goods ServicesSource: Bureau of Economic Analysis
  • 8. $130$150$170$190$210$230$250200520062007200820092010201120122013Manufactured Durable Goods(in Billions of Dollars)New Orders ShipmentsSource: U.S. Census Bureau
  • 9. 657075808590951001052007200820092010201120122013Industrial ProductionIndustrial Production Capacity UtilizationIndustrial Production/Capacity Utilization %Source: Federal Reserve Board
  • 10. -1.5-1-0.500.511.522.53Jan-12 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 13-Jan Feb% Changes in Manufacturing Production, 2012-2013Manufacturing Durable Goods Nondurable GoodsPercentSource: Federal Reserve Board
  • 11. 20.030.040.050.060.070.0ISM Manufacturing IndicesPurchasing Managers Index New Orders IndexEmployment Index Inventories IndexSource: Institute for Supply Management
  • 12. 80828486889092949698100-30-20-10010203040Regional Federal Reserve BankManufacturing & Business SurveysDallas Kansas City New York Philadelphia Richmond ChicagoIndex for all butChicago(Growth >0)Chicago Index(2007=100)Source: Regional Federal Reserve Banks
  • 13. 311271205112125871531651381602472191482688844294010 6 922-14 -18 6 7 13 14 19-3-5005010015020025030035012-Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec 13-Jan Feb MarMonthly Changes in Employment, 2012-2013(Thousands of Employees)Nonfarm Payrolls ManufacturingSource: Bureau of Labor Statistics
  • 14. 4%5%6%7%8%9%10%11%67891011121314Employment SituationDurable Goods Nondurable Goods Unemployment RateMillionsof WorkersUnemploymentRateSource: Bureau of Labor Statistics
  • 15. 4.37.110.311.721.144.952.2130.7167.8176.6Petroleum and coal productsMiscellaneous durable goods manufacturingElectrical equipment and appliancesMiscellaneous nondurable goods manufacturingFood manufacturingPlastics and rubber productsPrimary metalsMachineryTransportation equipmentFabricated metal productsManufacturing Sectors with the Largest NetEmployment Gains YTD, in Thousands of Employees(December 2009 to March 2013)Source: Bureau of Labor Statistics
  • 16. 6.97.68.19.311.211.713.515.116.518.018.022.122.827.529.834.950.154.158.788.3KansasFloridaColoradoUtahOregonGeorgiaPennsylvaniaNorth CarolinaSouth CarolinaIowaMinnesotaTennesseeKentuckyIllinoisWashingtonWisconsinOhioIndianaTexasMichiganTop 20 States for Manufacturing Job Creation,December 2009 to February 2013(in Thousands of Workers)Source: Bureau of Labor Statistics
  • 17. 7580859095100105Manufacturing Employment Growth(December 2007 = 100)Nonfarm Payrolls Manufacturing Durable Goods Nondurable GoodsSource: Bureau of Labor Statistics
  • 18. Source: Bureau of Labor Statistics50100150200250300350400450500550Manufacturing Job Hires & Separations(January 2007 to February 2013)Job Openings Hires Separations
  • 19. 90110130150170190210230250270290198719901993199619992002200520082011Growth in Output per Hour forManufacturing & Nonfarm Businesses(1987=100)Manufacturing Durable Goods Nondurable Goods Nonfarm BusinessSource: Bureau of Labor Statistics
  • 20. 5.7%8.1%1.5%3.1%4.3%-2.1%5.5%0.5%6.1%0.1%-0.9%2.1%7.8%11.8%5.5%3.1%6.8%0.7%5.2%5.5%10.2%1.3%-0.5%2.5%-8.8%-3.6%-0.3% -1.6%7.5%-0.4%-4.8%-6.6%1.1%9.0%1.4%-1.9%-12%-7%-2%3%8%13%Q1:2010 Q2:2010 Q3:2010 Q4:2010 Q1:2011 Q2:2011 Q3:2011 Q4:2011 Q1:2012 Q2:2012 Q3:2012 Q4:2012Percentage Changes in ManufacturingProductivity & Unit Labor CostsOutput Per Hour for All Persons Output Unit Labor CostsSource: Bureau of Labor Statistics
  • 21. Some Ongoing Strengths in the Economy A Recovering Housing Market Historically Low Interest Rates Modest Growth in Consumer Spending Growth in Exports, Albeit at a Slower Pace Lower Energy Costs, Aided by Shale Exploration Increased Signs of Reshoring, Improved Global Competitiveness
  • 22. 0102030405060708005001,0001,5002,0002,500200520062007200820092010201120122013Housing Market SituationHousing Starts Housing Permits NAHB Housing Market IndexNAHB HousingMarket IndexHousing Starts, Permits(in thousands of units)Source: U.S. Census Bureau, National Association of Home Builders
  • 23. 23456789Average 30-Year Fixed Mortgage Rates2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013PercentSource: Freddie Mac
  • 24. $20$30$40$50$60$70200520062007200820092010201120122013New Manufacturing Construction Spending(Value of Private Construction Put in Place, in Billions of Dollars)Source: U.S. Census Bureau
  • 25. -10.0-8.0-6.0-4.0-2.00.02.04.06.08.0-5-4-3-2-10123 2010201120122013Personal Income and SpendingPersonal Income Personal Spending Savings RatePersonal Income/Spending (% Change)Savings RatePercentageSource: Bureau of Economic Analysis
  • 26. 7075808590951001051102030405060708090100110120200520062007200820092010201120122013Monthly Business and ConsumerSentiment SurveysUniversity of Michigan Consumer Confidence Conference Board Consumer ConfidenceNFIB Small Business OptimismConsumerConfidence IndicesNFIB SmallBusiness Index
  • 27. 810121416182022200520062007200820092010201120122013Total Vehicle Sales(in Millions of Units)Source: U.S. Bureau of Economic Analysis
  • 28. 13.0%20.1%16.9%10.8%17.2%23.8%15.9%4.1%10.1%6.8%2.6%0.3%13.3%5.5%0%5%10%15%20%25%Canada Mexico FTA Asia Europe SouthAmericaTOTAL% Growth of Manufactured Goods Exports, 2011-20122011 2012Source: U.S. Department of Commerce
  • 29. 13.0%20.1%11.1%7.8%17.0%1.8%20.1%18.6%8.6%40.9%4.1%10.1%3.3%11.4%-2.8% -1.7%4.1%-2.7%1.3%2.3%-5%0%5%10%15%20%25%30%35%40%45%Canada Mexico China Japan UnitedKingdomGermany Brazil Netherlands South Korea Hong KongChanges in Manufacturing Exports for the Top 10U.S.-Manufactured Goods Export Markets, 2011-20122011 2012Source: U.S. Department of Commerce
  • 30. 49.352.251.650.448.348.951.848.052.050.545.050.055.0Canada Mexico China Japan UnitedKingdomGermany Brazil Netherlands South Korea Hong KongPurchasing Managers’ Indices for the Top 10 ExportMarkets for U.S. Manufactured Goods(March 2013)Notes:Eurozone PMI: 46.8Global PMI: 51.2Source: Markit
  • 31. Tremendous Promise of Shale Gas– PwC (December 2011) with the NAM: U.S. manufacturing companies could employ approximately one million moreworkers by 2025 due to the benefits of affordable energy and demand forproducts used to extract the gas. This same study found that, because of increased shale exploration, lowerfeedstock and energy costs could help U.S. manufacturers reduce natural gasexpenses by as much as $11.6 billion annually through 2025.– We have already seen how the shale gas revolution has transformedcommunities, helped to lift employment, and provide tremendouspotential moving forward.– Energy costs are a competitive advantage for U.S. manufacturers rightnow.
  • 32. 0%1%2%3%4%5%6%7%8%2010201120122013Producer Price IndexYear-Over-Year Percentage Changes for Each MonthPPI - Finished Goods PPI - Finished Goods Less Food & EnergyPercentSource: Bureau of Labor Statistics
  • 33. 10%12%14%16%18%20%22%24%26%28%1947 80Federal Government Receipts & Expenditures as a %of Gross Domestic Product, 1947 to PresentFederal Receipts as a % of GDP Federal Expenditures as a % of GDP23.8%16.9%Source: Bureau of Economic Analysis
  • 34. $0.0$0.5$1.0$1.5$2.0$2.5$3.0$3.5$4.02012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023Federal Mandatory Spending, 2012-2023(in Trillions of Dollars)Social Security Medicare, Net of Receipts Total Mandatory Spending MedicaidSource: Congressional Budget Office, February 2013
  • 35. The United States needs a comprehensiveplan for economic growth andcompetitiveness.
  • 36. GOAL 1The United States will be the best place in the world to manufacture andattract foreign direct investment.Manufacturers have an array of attractive options around the world when decidingwhere to invest, conduct research, build new facilities and create jobs. Create a pro-manufacturing tax policy. Embrace an “all-of-the above” approach to energy production. Modernize and invest in infrastructure. Ensure that the benefits of regulations justify their costs to manufacturers in theUnited States. Implement common-sense, fair legal reform. Reduce health care costs for both patients and providers.
  • 37. Manufacturers in the United States will be the world’s leading innovators.Innovation propelled the United States to its global leadership position in manufacturing.But other nations are eager to take our place and are establishing more attractive R&Dincentives than those offered by the United States. Provide a strong, permanent and competitive R&D incentive. Support federal research agencies and public- and private-sector research. Recognize IP as the basis of America’s innovative economy. Develop appropriate general and industry-specific best practices for improvedcybersecurity. Support the growth of a healthy information and communication technologyecosystem.GOAL 2
  • 38. The United States will expand access to global markets to enablemanufacturers to reach the 95 percent of consumers who live outside ourborders. Promote a global trade policy that opens international markets, enhancescompetitiveness and reduces regulatory and tariff barriers. Reduce trading costs, domestic export barriers and unnecessary red tape. Boost exports through improved export promotion programs and export creditassistance for both small and large manufacturers. Ensure a level playing field for manufacturers by enforcing trade laws andinternational agreements.GOAL 3
  • 39. Manufacturers in the United States will have access to theworkforce that the 21st–century economy demands. Address regulations and mandates that undermine employerflexibility and ultimately discourage the hiring of newemployees. Develop a more productive workforce and encourageinnovation through education reforms and improvements. Enact comprehensive immigration reform. Attract the best and brightest to the United States.GOAL 4
  • 40. Questions?Dr. Chad MoutrayChief EconomistNational Association of Manufacturerscmoutray@nam.org(202) 637-3148