The National Association of Manufacturers released its Manufacturers’ Outlook Survey for the fourth quarter of 2023, showing that small companies with fewer than 50 employees and medium-sized firms with between 50 and 499 employees, which make up a vast majority of the sector, continued to have historically lower levels of optimism with 65.9% and 63.0% positivity rates in Q4, respectively.

“It’s clear that Congress’ failure to enact pro-growth tax policies to support innovation and investment before year-end is affecting the manufacturing outlook,” said NAM President and CEO Jay Timmons. “Combined with the ongoing regulatory onslaught from the Biden administration, we’re facing economic headwinds that threaten all of the bipartisan wins achieved in recent years.”

Overall, 66.2% of respondents felt either somewhat or very positive about their company’s outlook, edging up slightly from 65.1% in the third quarter. It was the fifth straight reading below the historical average of 74.8%.

The NAM has been urging Congress to swiftly restore three critical manufacturing tax policies: immediate R&D expensing, a pro-growth interest deductibility standard and full expensing (100% accelerated depreciation). These competitive tax policies are critical to empowering manufacturers to grow their operations, hire more workers, increase wages, expand facilities and invest for the future.

Key Survey Findings:

•    Eighty-nine percent of respondents said higher tax burdens on manufacturing activities would make it more difficult to expand their workforce, invest in new equipment or expand facilities.

•    Workforce challenges also continue to dominate the sector, with more than 71% of manufacturers citing the inability to attract and retain employees as their top primary challenge.

•    A weaker domestic economy and sales for manufactured products (63.7%), an unfavorable business climate (61.1%) and rising health care and insurance costs (59.8%) are also impacting manufacturing optimism.

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